R Campbell and Others v London North Eastern Railway Ltd: 2501510/2023 and Others

EMPLOYMENT TRIBUNALS

Case No 2501510/2023

Between

Mr Mugliston of counselClaimant

London North Eastern Railway LtdRespondent

Before

Employment Judge Loy

Mr Mugliston (instructed by counsel) for claimant

Ms Laxton (instructed by counsel) for respondent

Date 19 November 2025

JUDGMENT

[1]Each claimant’s claim for direct age discrimination is not well-founded and fails.

[2]Each claimant’s claim for indirect age discrimination is not well-founded and fails. 10.5 Reserved judgment with reasons – rule 61 1 March 2017

REASONS

[3]By a claim form presented on 28 June 2023, the first, second and third claimants brought claims of direct and indirect age discrimination.

[4]Each claimant alleges that the respondent’s failure to make payments to him under its Ill Health Severance Arrangements (IHSA) involved direct and indirect age discrimination contrary to sections 13 and 19 of the Equality Act 2010 (EqA). The claimants say that the sole reason the respondent failed to make any payments to them under the IHSA was because each claimant was over the age of 65 when his employment ended.

[5]By a claim form presented on 7 December 2023, the fourth respondent brought a claim in the same terms.

[6]In its response forms, the respondent denied all allegations.

[7]Put simply, the respondent contends that the claimants were not entitled to any payments under the terms of its IHSA because each claimant was over the age of 65 at the time his employment terminated and as such was above the age cap on IHSA benefits. The respondent further contends that the age cap is capable of objective justification the effect of which is that none of the claimants has been discriminated against.

[8]None of the claimants brought any legal complaint in these proceedings about the fact of his dismissal or the process that led up to it. Respondent’s application to amend

[9]For reasons given at the time, the tribunal granted the respondent’s application made at the start of the hearing to amend its grounds of resistance. The list of issues set out below reflect the grounds of resistance as amended. Background to the parties

[10]The respondent (LNER) is a provider of public rail transport on the East Coast Main Line. It operates under franchise issued by the Department for Transport (DfT). It is a wholly owned subsidiary of what is now DfT Operator Limited. It is funded through a combination of revenue from ticket sales, freight services and other operational activities and subsidy from public funds. The subsidy operates so as to deliver a guaranteed profit margin for the respondent.

[11]The claimants are all former drivers, each of whom had over 40 years employment with the respondent prior to their dismissals. During their employment, the East Coast Main Line was operated by several different providers, including the British Railways Board (BR), Great North Eastern Railway Limited, Virgin Trains East Coast Limited (VTEC) and LNER. 10.5 Reserved judgment with reasons – rule 61 2 March 2017

[12]BR and LNER operated directly under public ownership. The interceding private sector providers operated under the InterCity East Coast franchise issued from time to time by DfT. On each occasion when there was a change of provider, the terms and conditions of the claimants transferred under the Transfer of Undertakings (Protection of Employment) Regulations 1981/2006 (TUPE) in place from time to time. LNER took over responsibility for the franchise in 2018 as the operator of last resort when VTEC experienced financial difficulties.

List of issues

[13]An agreed list of issues was set out at pages 99 to 101 of the bundle of documents. It is (as amended) as follows: Direct age discrimination (section 13 of the EqA) 1. Did the respondent, because of age, treat the claimants less favourably than it treated or would have treated others by refusing to make payment to the claimants under the ill health severance arrangements (the IHSA)? Factually it is agreed that:a. upon the termination of employment, each claimant received payment in lieu of notice and payment in lieu of accrued untaken holiday entitlement; and

b. the claimants did not receive payments under the IHSA. 2. The claimants rely on the following comparators: a. Mark Newton; and b. Trevor Batey 3. In any event, was any such treatment a proportionate means of achieving a legitimate aim? The respondent relies on the following as legitimate aims: retirement (and at the time of that compulsory retirement, accessing retirement benefits under both the respondent’s pension arrangements and the state pension) from receiving financial support under the IHSA (and thereby receiving a windfall); b. seeking to ensure that the funds available for providing financial support to employees suffering from ill health are allocated across the respondent’s workforce in a fair and equitable manner (and thereby promoting fairness between employees of different age groups);

c. seeking to provide financial support to employees suffering from ill health in a financially responsible manner, particularly given the respondent’s status as a state-owned organisation; 10.5 Reserved judgment with reasons – rule 61 3 March 2017

d. cushioning the financial blow to employees in younger age groups who are required to stop (or significantly reduce) working due to suffering from ill health; and

e. maintaining positive relationships with driver company council representatives and the applicable trade union. Indirect age discrimination (section 19 EqA) 4. It is agreed that the respondent applied the provision, criterion or practice to the claimants: the IHSA. 5. Did the respondent apply, or would it have applied, the PCP to persons with whom the claimants do not share the protected characteristic of age? In this regard, the particular age group relied upon by the claimants is persons aged 18 or over and under the age of 65. Factually, it is agreed that the respondent applied the IHSA to persons within that particular age group. 6. Did the PCP put, or would it have put, persons with whom the claimants share the characteristic of age at a particular disadvantage when compared to persons with whom the claimants do not share it? In this regard, the particular, the particular disadvantages relied upon are: a. they were not paid a lump sum payment under the IHSA; and b. they were not paid continuing weekly payments under the IHSA. 7. Did the PCP put, or would it have put, the claimants at that disadvantage? 8. Factually, the respondent accepts that: a. persons aged 65 or over are not eligible to be paid a lump sum payment and/or continuing weekly payments under the IHSA; and b. the claimants - being 65 or over at the termination of employment – were not paid a lump sum payment and/or continuing weekly payments under the IHSA. 9. In any event, was the PCP a proportionate means of achieving a legitimate aim? The respondent relies on the following as legitimate aims: retirement (and at the time of that compulsory retirement, accessing retirement benefits under both the respondent’s pension arrangements and the state pension) from receiving financial support under the IHSA (and thereby receiving a windfall); b. seeking to ensure that the funds available for providing financial support to employees suffering from ill health are allocated across the 10.5 Reserved judgment with reasons – rule 61 4 March 2017 respondent’s workforce in a fair and equitable manner (and thereby promoting fairness between employees of different age groups); c. seeking to provide financial support to employees suffering from ill health in a financially responsible manner, particularly given the respondent’s status as a state-owned organisation; d. cushioning the financial blow to employees in younger age groups who are required to stop (or significantly reduce) working due to suffering from ill health; and e. maintaining positive relationships with driver company council representatives and the applicable trade union. Evidence

[14]The tribunal was provided with an agreed bundle of documents. It consisted of 419 pages.

[15]Each of the claimants gave evidence on his own behalf.a. Mr Campbell produced a written witness statement of 42 paragraphs over 4 pages.

b. Mr McQueen produced a written witness statement of 45 paragraphs over 5 pages.

c. Mr McGuire produced a written witness statement of 45 paragraphs over 4 pages.

d. Mr Mack produced a written witness statement of 49 paragraphs over 5 pages.

[16]Each of the claimants was cross examined by Ms Laxton. The exception was Mr McGuire who fell ill during his evidence with the effect that Ms Laxton was unable to conclude her cross examination of him and he could not be re-examined by Mr Mugliston. Both counsels agreed that the matter should be determined without the need for Mr McGuire to be re-called. Given the commonality of the issues to each of the claimants’ cases, the tribunal was also content to proceed on that basis.

[17]The respondent called two witnesses:a. Miss Susan Thorpe, Employee Relations Manager. Miss Thorpe produced a written witness statement of 52 paragraphs over 10 pages. Ms Thorpe was crossexamined by Mr Mugliston.

b. Mr Ken Marriott, Operations Delivery Manager. Mr Marriott produced a written witness statement of 17 paragraphs over 3 pages. Mr Marriott was crossexamined by Mr Mugliston. 10.5 Reserved judgment with reasons – rule 61 5 March 2017

[18]The claimants and the respondent both produced detailed written closing submissions. Findings of fact The relevant provisions of the IHSA

Findings of fact

[19]The IHSA provisions are contained in paragraph 9.6.13 of the PDA. They are in the following terms. Payment to Employees Leaving the Service Under the Ill-Health Severance Arrangements Such employees will be dealt with as follows: -(a) An ill-health employee who is redundant or whose position is required to accommodate a redundant person, will receive the redundancy payment.

(b) Where an ill-health employee does not fall to be dealt with under (a) above, the following arrangements will apply:- (i) A lump sum payment equating to One week’s basic salary for each year of service not concurrent with membership of the Railways Pension Scheme or BR Superannuation Fund, providing that such membership gives rise to an entitlement to immediate/deferred benefits. For this purpose, deemed years of membership which were credited to members of the BR (Wages Grade) Pension Fund in 1997 will be treated as membership service. Pension Scheme/Fund Membership in excess of 40 years will be treated as non-pensionable service. Employment entitling employees to ex-gratia benefits and benefits from the BTC (Male Wages Grade) Pension Grade and other minor funds, will be treated as nonpensionable employment. The payment will be rounded to nearest £1. (ii) Continuing Weekly Payments (to be calculated and paid as a lump sum). Supplemental Payments sufficient to build up annuity payments (if any) and unemployment/sickness benefit for a single person, to one week’s basic salary. The annuity payment for the purpose of continuing weekly payments are to be regarded as 75% of the total annuity, including any pension lump sum. 10.5 Reserved judgment with reasons – rule 61 6 March 2017 The payment is calculated on the basis of two weeks’ continuous payments for each five years’ service up to and including 50 years of age. Service over age 50 will qualify for additional weekly payments as follows: Years Service Additional weeks, After Age 50 Continuing Payments Up to 1 2 Up to 2 4 Up to 3 6 Up to 4 10 Up to 5 14 Up to 6 20 Up to 7 26 Up to 8 32 Up to 9 36 Up to 10 38 10 & Over 40 The total number of weekly continuing payments will not exceed 52. (iii) The total combined i.e., lump sum and continuing weekly payments, will not exceed a payment related to the weekly rate calculated by analogy with the relevant provisions of the Employment Rights Act 1996, or the employee’s basic salary, whichever is the greater, multiplied by the remaining weeks up to age 65 or, if appropriate, 60 in the case of women. Facts that are agreed between the parties

[20]Much of the facts are not in dispute. Where a dispute arose, the tribunal’s finding fact were made on the balance of probabilities.

[21]It was common ground that:a. Each of the claimants was a ‘protected person’ as defined in the Railway Act 1993, the effect of which was to preserve their status upon amendments to the respondent’s pension arrangements.

b. The claimants are all drivers on the East Coast Main Line. There are approximately 400 drivers on the Aberdeen to London route. Approximately 130 drivers are based at Newcastle.

c. Each of the claimants was a member of the East Coast Main Line section of the Railways Pension Scheme (RPS). The RPS is a final salary defined benefit occupational pension scheme. 10.5 Reserved judgment with reasons – rule 61 7 March 2017

d. The purpose of the pension scheme is to provide an income for life after retirement.

e. There are four sections to the pension scheme. The entitlement of members to access 100% pension benefits depends on which section a member belongs to [200]. Each of the claimants belonged to Schedule 8 of the scheme (column A) [200]. This is the most advantageous section when it comes to the minimum age at which members can access 100% pension benefits without actuarial reduction.

f. Each of the claimants was able to access 100% pension benefits from the age of 60. In contrast, members in the section known as CNERF64 (column D [200]) are only able to access 100% pension benefits from the age of 64.

g. In all four sections of the scheme there is a sliding scale by which members can access pension benefits at an earlier age while suffering an actuarial reduction (expressed as a percentage) to the pension benefits they will receive. In other words, the level of pension benefits that can be accessed under the scheme is a function of the age at which a driver chooses to access those benefits. In the tribunal’s industrial experience this is a very common, if not universal, feature of the operation of defined benefit pension schemes.

h. The terms and conditions of employment of all the claimants were set out in a collectively agreed document: The Professional Driver Agreement (the PDA). The purpose of the PDA is to provide certainty around the terms and conditions of all 400 drivers who are all subject to the same terms and conditions of service.

i. The PDA was originally agreed in 2000 between GNER (the franchisee at the time) and the driver company council representatives and the applicable trade unions, including ASLEF. Mr Campbell, Mr McQueen and Mr McGuire are members of ASLEF. Mr Mack is a member of RMT.

j. All parties agreed that the relationship between the respondent and its recognised trade unions should be seen as a partnership whose aim was to provide certainty to both the company and the drivers. It was also agreed that as a general proposition it was in the best interests of the company and its objectives that it maintains harmonious relationships with its recognised unions.

k. The unions, including ASLEF, would be unhappy should the respondent ‘abrogate’ (i.e. not follow) its collective agreements including the PDA.

l. Should the respondent unilaterally vary or depart from a collective agreement, it was foreseeable that the union might register a dispute with the respondent which may lead to industrial action.

m. The PDA was amended on several occasions after 2000. The latest version is ‘Issue 9’dated 9 November 2015 [107 – 179]. The 2015 version was agreed with the driver company council representatives by VTEC when it held the franchise. The PDA 2015 was the applicable agreement governing the terms and conditions of the claimants. 10.5 Reserved judgment with reasons – rule 61 8 March 2017

n. The PDA contains Ill Health Severance Arrangements (IHSA). The IHSA are at paragraphs 9.6.13 of the PDA [150 – 151]. The purpose of the IHSA is to provide financial support to drivers who, due to ill health, are unable to remain in employment with the respondent. The IHSA are the contractual provisions out of which the issues in dispute in this claim arise.

o. The design of the IHSA includes a provision that a driver who receives a redundancy payment under paragraph 9.8.4 PDA on termination of employment will not also be entitled to receive any additional payments (i.e. neither a lump sum payment under b(i) or continuing weekly payments under b(ii)) under the IHSA, even if that driver’s was dismissed (such as voluntary redundancy) by reason of ill-health. The PDA provisions on redundancy payments include tapering provisions whereby the level of payment is reduced for employees over the age of 55.

p. The state retirement age was abolished by the Pensions Act 2011. At the time of their dismissals, the state pension age for each of the claimants was 66.

q. The IHSA has not been amended since 2011 in response to the abolition of the

r. The IHSA are subject to various caps placing upper limits on the amount that is payable. The relevant cap in this matter is the provision at subparagraph (b)(iii). The effect of subparagraph b(iii) is that a driver aged 65 or over on the termination of employment is not eligible for any financial support under the IHSA.

s. The amount of the continuing weekly payments at b(ii) increase in respect of years of service between the ages of 50 and 60. B(ii) includes tapering provisions reducing the level of financial support from age 64 which decrease progressively until age 65 at which point eligibility for financial support ceases.

t. Prior to the abolition of the default retirement age of 65 on 6 April 2011, the respondent operated a compulsory retirement age of 65. After that, the respondent initially considered requests to work beyond 65 on a case by case basis. Latterly, it ceased compulsory retirement age altogether. Drivers were then able to continue to work if they wanted to do so provided they passed their annual medical assessment.

u. Mr Campbell’s employment ended by reason of ill-health retirement on 11 January 2023. He was aged 65 and 2 months at the time of his dismissal. He had been on long-term sickness absence since March 2022.

v. Mr McQueen’s employment ended by reason of ill-health retirement on 28 January 2023. He was aged 65 years and 10 months at the time of his dismissal.

w. Mr McGuire’s employment ended by reason of ill-health retirement on 27 January 2023. He was 65 years and 9 months at the time of his dismissal.

x. Mr Mack’s employment ended by reason of ill-health retirement on 25 August 2023. He was 65 years and 8 months at the time of his dismissal. 10.5 Reserved judgment with reasons – rule 61 9 March 2017

y. None of the claimants complain in these proceedings about the decision to terminate their employment or the process that was followed leading to that decision. Their complaints in these proceedings are solely about the respondent’s failure to make payment to them under the IHSA.

z. On the wording of subparagraph b(iii), the claimants, each being over 65, were not entitled as a matter of contractual construction to any payments under the IHSA. aa. None of the claimants received any financial support under the IHSA. On termination of employment, each of the claimants received a payment in lieu of notice and a payment for accrued unused holiday pay. bb. On 17 April 2023, Mr Marriott dismissed appeals by Mr Campbell, Mr McQueen and Mr McGuire against the respondent’s failure to make any payment to them under the IHSA. On 10 October 2023, Mr Marriott dismissed Mr Mack’s appeal on the same basis. cc. The employment of two other drivers, Mr Moran in 2017 and Mr Hanratty in 2023, was terminated by reason of ill-health retirement. Both Mr Moran and Mr Hanratty were over the age of 65 when their employment ended. Both Mr Moran and Mr Hanratty received payments under the IHSA. dd. The two named comparators, Mr Newton and Mr Batey, were both dismissed because of ill-health. Both were aged 62 at the time of their dismissal. Both received financial payments under the IHSA. ee. Each claimant was entitled to contractual sick pay under the PDA. Their entitlement was determined by reference to length of service. Due to their length of service each claimant was entitled to the maximum benefit of 6 months full pay followed by 6 months half pay. ff. The role of Driver is a safety critical role. The respondent’s Safety Management Systems [212-232] require Drivers to undergo a medical assessment every 3 years up until the age of 55 and then annually after that [218]. Other factual findings The claimants’

Evidence

[22]Each claimant had given long and dedicated service to the railway. The tribunal found Mr Campbell, Mr McQueen and Mr Mack to be sincere and credible witnesses. Mr McGuire’s evidence, while sincere, was more problematic in that he frequently failed to engage with Ms Laxton’s questions and was argumentative. The main reservation that the tribunal had about the reliability of the claimants’ evidence was that it tended to be dogmatic and on occasion self-serving, for example Mr Campbell’s refusal to accept that health tends to deteriorate with age by citing the example of a 72 year old of his acquaintance who is in robust health.

[23]Much of the focus form the claimants’ perspective was on Messrs Moran and Hanratty and not on the comparators named in the pleadings (Mr Newton and Mr Batey) from a different age group that had been identified by their solicitors when providing further information of their cases.

[24]Each of the claimant’s positive case in their witness statements was that they had suffered unlawful age discrimination on the basis that they were denied payments under the IHSA because of the capping provision in subparagraph b(iii) of the IHSA which disentitled drivers from receiving any payments under the IHSA once a driver reached the age of 65.

[25]Each of the claimants claimed by way of compensation a lump sum payment under b(i) and continuing weekly payments (calculated as a lump sum) under b(ii). Each claimant also made a claim for an award for injury to feelings.

[26]Subparagraph b(i) applies where a driver is in pensionable service but not in the pension scheme. The claimants all maintained their claims under b(i). At the same time, they readily conceded that they had the maximum number of years of reckonable service in the occupational pension scheme (i.e. 40 years). In those circumstances it was plain that there was no entitlement.

[27]Taking each of the claimant’s evidence in turn, the tribunal found the following facts, many of which came in the form of either contentions advanced by the claimants or disagreements with propositions put to them in cross-examination by Ms Laxton. This reflected the nature of the claims made in this case which are in large part submissions on the operation of the IHSA as they were applied to the claimants.

[28]Mr Campbell disagreed when asked to accept that as a general proposition health concerns are likely to increase with age. Mr Campbell referred to someone he knew who was in good health at age 72.

[29]However, that isolated example does not meet the proposition that was put to him by Ms Laxton. The tribunal accepts Ms Laxton’s proposition that the likelihood of health concerns materialising does increase with age. The tribunal does not require any evidence to support this proposition on the basis that it is self-evidently correct. The tribunal also accepts the implicit point that this is reflected in the requirement under the respondent’s Safety Management System [200] that medical assessments are required annually after a driver reaches the age of 55 rather than every 3 years as is the case for drivers beneath that age.

[30]On the matter of the respondent’s funding and the parameters within which the respondent is expected to operate, the tribunal preferred the evidence of Miss Thorpe to that of the claimants.

[31]The tribunal accepts Miss Thorpe’s principal point that the respondent does not have access to endless resources just because it is in state ownership or because of the atypical nature of the respondent’s funding arrangements and guaranteed profit margin.

[32]Those funding arrangements operate in a sector specific manner such that the franchisees are guaranteed a certain minimum profit margin underpinned, if necessary, by subsidy from public funds. However, it does not follow from that financial model that the franchisees have access to unlimited funds. After all, VTEC Trains was replaced as the franchisee by the respondent because it could not meet its financial commitments.

[33]The Tribunal accepted Miss Thorpe’s evidence that the respondent is expected to act in a financially responsible manner which included making best use of public funds. Such a discipline is commonplace in the use of public money. The tribunal noted that the respondent is, as would be expected, subject to twice yearly independent financial audits commissioned by DfT.

[34]The parameters within which the respondent must operate fiscally also includes a duty to get ‘best value’. This duty is expressly acknowledged in the PDA. In the ‘Overview’ section [112] it says explicitly “The purpose of this agreement is to set out the methods by which best value be obtained from VTEC driving grade employees.”

[35]The objective of obtaining best value applies to the design and application of the IHSA which is part of the PDA.

[36]In response to direct questioning by Ms Laxton, Mr Campbell accepted that the lump sum payment under (b)(i) IHSA addresses circumstances where a driver had missing pensionable years from the occupational pension scheme (the RPS). Mr Campbell also accepted that at the time of his dismissal he had already accrued 40 years pensionable service in the RPS and that 40 years was the maximum number of reckonable years under the scheme.

[37]Mr Campbell accepted in respect of the continuing weekly payments under (b)(ii) that the drafting of this provision went back to the days of the ‘Purple Book’. The Purple Book is a shorthand reference to a collective agreement containing the drivers’ terms and conditions going back to the pre-privatisation period of the British Railways Board.

[38]Mr Cambell was asked by Ms Laxton why he thought b(ii) contained a ‘sweet spot’ of increasing payments for ill-health dismissals for years of service between 50 and 60 and why there were then caps in (b)(iii) including a cap reducing b(ii) payments to zero at age 65. Mr Campbell responded by saying that was ‘a hard question’.

[39]Mr Campbell accepted that he had no complaint about the fact that parts of the IHSA provided for an increase to payments with age/length of service and that his complaint was focused on the age cap in b(iii).

[40]Mr Cambell was prepared to concede as a general proposition that a driver dismissed for ill-health reasons who had no access to any alternative source of income would be in greater need than a driver dismissed in the same circumstances who did have access to an alternative source of income.

[41]He also accepted that access to occupational pension income was an example of access to an alternative source of income and that he was personally able to access his pension and receive 100% of his accrued benefits under the scheme without reduction from age 60. Accordingly, he was able to access those benefits at the time of his dismissal.

[42]The RPS is a 1/40th scheme with the effect that in broad terms he was able to access an occupational pension income of 40% of his final salary as defined in the scheme rules.

[43]Mr Campbell was also prepared to accept that there had to be some form of limitation on the IHSA on the basis that the respondent cannot reasonably be expected to ‘spend indefinitely’.

[44]Mr Campbell also accepted that it was legitimate for the respondent to use age as a basis for containing entitlement under the IHSA. Mr Campbell’s position was that he would have been content if the limitation in b(iii) IHSA had continued to track the date upon which a driver was also able to access state pension. In his case that would have been 66 years of age which would have meant that he would also have been entitled to the continuing weekly payments (paid as a lump sum) under subparagraph b(ii) subject to any tapering provisions.

[45]Mr Campbell accepted that he was not entitled to a lump sum payment under b(i) IHSA. This meant that the £58K claimed under b(i) needed to be removed from his schedule of loss. This left his claimed losses as £67,708 plus any award for injury to feelings. When asked about his claim for injury to feelings, Mr Campbell accepted that the scheme was not directed at him and was not disadvantaging him by design. He did not contest that Miss Thorpe had made the efforts she said the respondent had made to engage the drivers’ representatives, including recognised trade unions in discussion with a view to agreeing changes to the IHSA.

[46]Mr McQueen accepted that:a. The respondent did not have a ‘bottomless pit’ of funds. The IHSA had to be subject to some form of limiting factors.

b. Drivers underwent medical assessment every 3 years until age 55 and then annually thereafter.

c. There was as a general proposition a link between increasing age and increasing health risk.

d. His pension under the RPS was an income for life from the date of retirement or such earlier time that he accessed benefits. This was reflected in the Guide to Members booklet [184].

e. He started to contemplate retirement from about the age of 60.

f. He was a member of the most advantageous section of the RPS in terms of the age at which he was able to access 100% pension benefits (age 60).

g. All things being equal, it would be unwise to retire at age 50 due to the actuarial reduction factors that would apply to the value of pension benefits a member could access under the rules of the RPS.

h. The PDA could only be changed by negotiation involving (amongst others) ASLEF or by statute.

i. The PDA provided certainty around terms and conditions of service.

j. The objective of the PDA was to achieve ‘best value’ [107].

k. An attempt by the respondent to impose a unilateral change to the PDA risked souring industrial relations.

l. He was not entitled to a lump sum under paragraph b(i) IHSA.

m. He had no complaint about the provisions in b(ii) that provide that between the ages of 50 and 60 a driver would accrue enhanced value for years of service between those ages up to a maximum of 40 weeks continuing weekly payments.

n. There would be a greater impact on a driver who was dismissed on ill-health grounds if they had no alternative source of income at the time their employment and (therefore) salary ceased.

o. Age-related considerations informed other benefits under the PDA, such as the enhanced redundancy payment arrangements at paragraph 9.8.4 PDA [154-155] which broadly increased depending on length of service; and the accrual of the maximum sick pay entitlement of 6 months full and 6 months half pay which requires drivers to reach a qualifying threshold of 5 years’ service.

p. He had no complaint about the 52 week cap in b(iii) which places a maximum limit on the total of payments under b(i) and/or b(ii).

q. His complaint was about the age cap in b(iii) that reduced entitlements down to zero at age 65.

r. The respondent had tried to engage the unions in discussion about re-negotiating the IHSA.

s. He had been redeployed on medical grounds for over 10 years between 2011 and 2022 during which time he was on a full driver’s salary.

t. The annual value of his occupational pension was in the region of c £30k compared to his full driver salary of c £70k. The values of his state pension would be in the region of £10K.

[47]Mr McGuire accepted that:a. Younger drivers with less service would accrue a lower entitlement to IHSA benefits under b(ii) than older drivers.

b. The ‘sweet spot’ for the highest entitlement under IHSA b(ii) is for the age group whose years of service include service between 50 and 60 years of age.

c. He had been able to go part-time because he could access his occupational pension benefits while continuing to work. Mr McGuire described his part-time income as ‘pocket money’.

d. A person’s health is likely to get worse with age.

e. His union (ASLEF) would have understood what they were agreeing to when negotiating the PDA.

f. The respondent was under an obligation to achieve best value in its use of funds and was under and obligation to act with financial responsibility.

g. Although he had a break in service, he had nonetheless accrued the maximum of 40 years of pensionable service when his employment terminated.

h. He had no complaint about the 52 weeks’ pay cap on IHSA payments under b(i) and/or b(ii).

i. It was important that the respondent maintained good relationships with trade unions.

j. He felt ‘cancelled as a person’ when he was denied IHSA payments because of his age. It was an ‘overpowering kick in the gut’. He was made to feel ‘subhuman’.

[48]Mr Mack contended that:a. The PDA was outdated and did not reflect changes to the law. The PDA needs updating. The respondent was under duty to take cognisance of changes in legislation.

b. State retirement age was the foundation of the IHSA b(ii). It was no longer fit for purpose once the default retirement age of 65 was abolished.

c. He intended to keep working for as long as he was able to pass his annual medical assessment.

d. It would be fairer if the cap at 65 had been changed to reflect the increases to the

e. He had no plans to retire before 70.

f. The respondent treated a period of sick leave for which he would otherwise have been paid at half pay as annual leave to maintain his full pay. He had not agreed to this, and the respondent did this unilaterally.

g. He profoundly disagreed with the evidence in Miss Thorpe’s witness statement regarding the efforts she says the respondent made to engage with the unions and drivers’ representatives to change the PDA. He believed that if a matter was put on the agenda, the union would have no option but to discuss it. The respondent should have tried harder.

h. It was a talking point among the drivers and the managers that Mr Moran and Mr Hanratty had received payments under IHSA despite being aged 65 at the time of their ill-health dismissals.

i. He was sceptical that Mr Moran and Mr Hanratty had been paid IHSA benefits in error.

j. The respondent was not a generous employer.

[49]Mr Mack accepted that:a. He was not on the negotiating body so he couldn’t know what was going on in connection with any discussion about changes to IHSA.

b. As a member of RMT not ASLEF the information about discussions on the company council would be less free flowing.

c. He felt let down by both the union and the respondent.

d. He was in the occupational pension scheme throughout his employment.

e. There was a taper by age affecting access to occupational pension benefits. The percentage of pension benefits that could be accessed increases with age.

f. The caps in b(iii) reflect the fact that the respondent’s resources are not infinite.

g. He had no complaint about the cap on IHSA payments at 52 weeks’ pay.

h. The principle of capping was justified because ‘it IHSA couldn’t be expected to go on indefinitely’ and ‘nothing goes on forever’.

i. He did not complain about the enhancements to the b(ii) continuing weekly payments between age 50 and 60.

j. The objective of the PDA, including IHSA, was to get ‘best value’.

k. It was because of his age that he was able to access 100 % of his occupational pension benefits

l. His occupational pension was an alternative source of income.

m. His annually salary before his dismissal was £70,491. His annual pension income was in the region of £30k depending on whether a lump sum option was taken. The respondent’s evidence Miss Thorpe

[50]Miss Thorpe gave evidence on behalf of the respondent on the operation and application of the IHSA. The tribunal accepted her evidence as truthful and reliable. Her evidence was consistent, and she made concessions where appropriate that were not necessarily advantageous to her case (such as in respect of Mr Moran and Mr Hanratty). Her evidence was also consistent with the written documentation.

[51]Miss Thorpe said that the respondent:a. Is in public ownership as the ‘operator of last resort’.

b. Is underwritten by the financial security of the UK government.

c. Generates its own revenue through charging fares and ancillary income from car parking, catering and fuel sales.

d. Receives a subsidy from government under its service agreement with the Department for Transport. The level of subsidy is such that will deliver a predefined profit margin. In 2023/2024 that subsidy was £36 million.

e. Operates within the UK government’s Managing Public Money principles. Those principles include a requirement to operate within the law, in the public interest and to achieve value for money.

f. Is audited twice annually by independent auditors and reports quarterly to DOHL Board members through its Audit and Risk Committee.

[52]Miss Thorpe’s evidence on the structure and operation of the IHSA was that:a. The purpose of the IHSA is to provide financial support to drivers who through ill health are unable to continue in the respondent’ employment.

b. The IHSA consists of a lump sum payment under b(i) and/or a continuing weekly payment (calculated as a lump sum) under b (ii).

c. The IHSA provides support at enhanced rates for years of service between the ages of 50 and 64.

d. The IHSA has capping arrangements which act as a limit on the total payments that can be made under it.

e. The IHSA continuing weekly payments under b(ii) are calculated by accrediting two weeks’ pay for each five years of pensionable service up to age 50 which is enhanced incrementally for years of pensionable service worked between 50 and 64.

f. Once a driver reaches the age of 64 the total payments are reduced incrementally until the driver reaches the age of 65.

g. A driver aged 65 or over at the date of ill-health termination of employment is no longer eligible for financial support under the IHSA.

h. When the PDA was first agreed in 2000, the symmetry of the cap at age 65 was to dovetail with what was then the compulsory retirement age at the respondent of 65. At that time the state pension age was 60 for men and 65 for women.

i. The balance that the capping of payments at age 65 sought to draw was between providing support to drivers subject to ill-health capability dismissals from their date of dismissal until the date upon which the drivers would be able to access an alternative source of income in the form of occupational pensions arrangements and state pension.

j. The tapering provisions that reduced entitlement between 64 and 65 was to reflect the relatively short period of time that a driver who was subject to ill-health would have to wait before being able to access occupational and state pension arrangements.

k. After the abolition of the default retirement age in 2011, the respondent initially considered applications to continue working on a case by case basis and then ceased compulsory retirement altogether. Drivers would then retire at an age of their choosing if they continued to pass the annual medical assessment applicable to their safety critical role.

[53]Miss Thorpe’s evidence on the respondent’s occupational pension scheme and the state pension was that:a. Each of the claimants had protected pension status.

b. The RPS is a contributory pension scheme meaning that the respondent pays contributions into the scheme as well as the contributions from the employees. Almost all drivers are in the RPS.

c. The claimants’ normal retirement age under their section of the RPS was 60, at which point they could access 100% of their pension benefits with no actuarial reduction.

d. The normal retirement age under the RPS increased in 2015 to 64. Members joining the scheme on or after 2015 have a normal retirement age of 64. Existing members had the option to move their retirement to 62 by increasing their contributions.

e. As a general proposition, drivers in the claimants’ roles typically retire at 62 to 63.

f. Each claimant would be able to access the state pension at age 66.

[54]Miss Thorpe’s evidence on the aims of the capping provisions in b(iii) IHSA was that: Windfalla. In the absence of a cap at age 65, a driver subject to ill-health dismissal could have received up to 52 weeks’ pay under the IHSA as well as accessing both his occupational and state pension. This would have left the driver better off than had he remained in employment. This would have amounted to a ‘windfall’. The cap operated to prevent that happening.

b. The respondent, recognising that the compulsory retirement age has been abolished, has attempted to agree changes to IHSA with the drivers’ council/union representatives. The company had proposed a flat payment of 20 weeks’ pay with no age related factors. The company council/union’s position has been that the IHSA benefits should either be ‘levelled up’ or remain unchanged. Allocation of funds in a fair and equitable manner

c. Employees over the age of 65 are typically in a more favourable financial position should their employment be terminated because of ill health. Employees over the age of 65 are more likely to have access to occupational and state retirement benefits.

d. The fact that LNER receive payments from the Department for Transport to achieve a pre-determined profit margin does not remove the obligation on the respondent to maintain fiscal discipline – hence the twice yearly independent audit. In accordance with its obligation to comply with the principle of Managing Public Money, the respondent must allocate funds used to support employees subject to ill-health dismissal in a fair and equitable manner.

e. The cut off at age 65 is consistent with that principle since it directs funds towards the age groups who are less likely to have access to an alternative source of income on ill-health retirement. Financial responsibility

f. For similar reasons to those set out paragraphs 54 (c) to (e) above, the age cap at 65 is also consistent with the respondent’s obligation to act in a financially responsible manner.

g. Substantial funds have been paid out in recent financial years under the IHSA:

• In 2020/21, six employees received a total of £468,442 in IHSA payments

• In 2021/2022, fifteen employees received a total of £842,507 in IHSA payments

• In 2022/23, twenty three employees received a total of £416,330 in IHSA payments

• In 2023/24, twenty four employees received a total of £661,182 in IHSA payments

h. During the same period, five employees (including the four claimants) have been subject to ill-health retirement but not received financial support under the IHSA. Inter-generational fairness

i. The architecture of the scheme promotes access to financial support for younger employees who, because they are less likely to have access to an alternative source of income, are likely to be in greater financial need. This helps ‘cushion the blow for younger workers who are more likely to suffer a greater financial loss. Maintaining relationships with recognised trade unions

j. The respondent has sought on several occasions to negotiate changes to the IHSA with the drivers’ council and its recognised trade unions. The respondent has made a proposal which would remove age-related factors. Those attempts have been unsuccessful.

k. Industrial relations in recent years have been challenging and has included significant periods of industrial action. It is not a practical option for the respondent to impose a change to the IHSA (or any collective agreement) since this is very likely to provoke an industrial dispute. The recognised unions are very likely to object strongly if the respondent ‘abrogates’ (i.e. does not follow) collective agreements unless and until they are amended through negotiation.

[55]In cross-examination, Miss Thorpe:a. Accepted that the respondent was under a duty to explore ways to avoid the discriminatory impact of its policies.

b. She had never known a payment to be made under b(i) IHSA.

c. It was very unusual for a driver not to be in the pension scheme.

d. After 40 years of pensionable service, no further years of service would be reckonable for pension entitlement purposes.

e. There had never been an ill-health dismissal of a woman between the ages of 60 and 65, so that discriminatory cap in b(iii) has not arisen. She was grateful that this situation had not arisen because she was aware of the sex discrimination implications of that part of b(iii).

f. She agreed that the IHSA was out of date after the abolition of the state default retirement age of 65. She would like the IHSA to be changed with all references to age removed. She denied that this meant that she implicitly accepted that the cap at age 65 in b(iii) was not capable of objective justification.

g. She denied that the respondent had failed over the course of the 12 years since the abolition of the default retirement age to put to the unions that there was a problem with the impact of the provisions of the IHSA. She said that proposals had been put to the Absence Working Group in January 2020. She referred to the slides that accompanied a discussion which was wide enough to include the IHSA at [250 – 261]. She referred to the reference to ‘and associated costs [256]. She said she would never be as direct with the unions that the provisions were discriminatory.

h. At [277] there is a proposal that would have replaced the IHSA altogether and which would have applied to all employees not just to drivers. That proposal would have replaced IHSA with a payment on ill-health termination based on one week’s pay for each year of service subject to a cap of 20 weeks’ pay (paragraph 21 at [277]). This proposal was not agreed with the unions or imposed by the respondent.

i. To impose the proposal at paragraph 21 of the draft Managing for Attendance Policy would have caused friction with the unions at a time when employee relations were challenging including on-going pay disputes with Aslef.

j. The offer to change IHSA to a maximum payment of 20 weeks’ pay was not costed. This was on the basis that a cap at 20 weeks would inevitably have been less expensive than the existing cap of 52 weeks. The respondent anticipated that there would be negotiation around the 20 weeks proposal and costings would have been done when negotiations became clearer.

k. The cap at age 65 was in place for considerations broader than just cost.

l. Most drivers retire between 59 and 63 years of age.

m. She disagreed that there was a drive to get people out in 2023. The tribunal accepted that evidence on the basis that there was no evidence whatsoever to support the contention that there was such a drive.

n. She was not aware of the payments made to Mr Moran at the time Mr Moran left in 2017 or when the claimants left the respondent’s employment. She was not in her current position when Mr Moran left. She became aware later that Mr Moran’s payments were not in line with his terms and conditions of employment. It is probable that he received the cap off 52 weeks’ pay, a sum likely to be in the region of £70,000 to £80,000. By the time the payment came to light it would have been ‘inflammatory’ to try to claw the payment back.

o. She did not accept that the error made in respect of Mr Moran undermined the justification relied on of using funds in a fair and equitable manner. It was not helpful because it should not have happened. However, the payment to Mr Moran did not change the terms of eligibility under IHSA.

p. She accepted that the enhanced payments for years of service after 50 under b(ii) could be seen as a ‘windfall’. She explained that ensuring fairness was not an exact science and she isn’t saying that the structure of the IHSA is perfect.

q. She disagreed that there would be no impact if the respondent’s IHSA tracked the increased state pension age. She explained that any extension to the scheme would increase cost. The default retirement/state pension age was one part but not the only part of the justification of IHSA as originally drafted.

r. She said that there was no reluctance on the part of the respondent to offer alternative employment. She acknowledged that given the pay protection that applied to redeployed drivers that problems could emerge when drivers were redeployed into, for example, a Customer Services role.

s. The redeployed drivers with protected pay could be earning more than twice the salary of the substantive postholders. Mr Marriott

[56]Mr Marriott’s evidence related to his role as the appellate manger. In many ways his evidence was peripheral to the core issue of objective justification. Each claimant confirmed that he was not raising a complaint in these proceedings about the fact or process leading to his dismissal. The claimants accepted that the validity of the medical opinion that led to their dismissal. Mr Marriott’s sole involvement was in considering the appeals of the claimants.

[57]The tribunal accepted Mr Marriott’s evidence that each claimant was primarily concerned with going through the motions of an appeal as part of the process leading to making this current legal challenge to the respondent’s decision not to make any payment to them under IHSA. In the words of Mr Marriott, the appeals were ‘a tick box exercise’. Each claimant made clear at appeal his opposition to the respondent’s failure to make a payment under the IHSA.

[58]The tribunal accepted Mr Marriott’s evidence that he did not address the substance of the claimants’ contentions at appeal that the capping provisions in IHSA were outdated and discriminatory because he considered himself bound by the clear terms of the subparagraph b(iii) IHSA cap at age 65; and that he had no discretion to disapply that cap. Instead, Mr Marriott simply recorded the claimants’ allegations of age discrimination in his letters dismissing the claimants’ appeals.

[59]Mr Marriott was pressed in cross-examination about an inaccuracy in his response to Mr Mack at his appeal on 5 October 2023. Mr Mack and his trade union representative raised with Mr Marriott the inconsistency between the treatment of Mr Moran and Mr Hanratty and the treatment of Mr Mack. Mr Mugliston’s point was that Mr Moran and Mr Hanratty both received IHSA payments when they were also over the age of 65 at the time of their ill-health dismissals whereas Mr Mack did not.

[60]In the notes of Mr Mack’s appeal meeting [330], Mr Marriott told Mr Mack that these names had not been raised previously. In fact, Mr McQueen had raised the same two names with Mr Marriott at his appeal meeting on 13 April 2023 [311]. The tribunal finds that Mr Marriott was not candid with Mr Mack on 5 October 2023. Mr Marriott accepted that the treatment of Mr Moran and Mr Hanratty was common knowledge among the drivers and managers. By the time he spoke to Mr Mack he therefore knew that Mr Moran and Mr Hanratty had both been over 65 when their employment was terminated because of ill-health. The tribunal finds, on the balance of probabilities, that he also knew about these two cases at the time he spoke to each of the three other claimants.

[61]Mr Marriott ought to have acknowledged that, and he should have provided to the claimants the explanations for the difference in treatment that he gave to this tribunal. The explanation in the case of Mr Moran was that it was a mistake to make an IHSA payment to him. He should not have been paid.

[62]In respect of Mr Hanratty, Mr Marriott said that he understood that the process of terminating his employment had started when Mr Hanratty was 64 and ended when he was 65. Mr Marriott said there was some confusion about the trigger date, and he understood that the more generous reading of the IHSA was given to Mr Hanratty. This was contested by Mr Mack who said that Mr Hanratty had told him directly that he had been 65 when the process started. Findings of fact on Messrs Moran and Hanratty

[63]The tribunal heard a good deal of evidence on these two cases, and they were relied upon by the claimants in closing submissions. The tribunal was invited by the claimants to treat with suspicion the respondent’s evidence explaining how Messrs Moran and Hanratty came to receive IHSA payments totalling c£150k when they were both over the age of 65 at the point of ill-health termination.

[64]The respondent’s explanation for Mr Moran’s payment was that he was paid by mistake. The tribunal heard no evidence from those involved in the decision to make a payment to Mr Moran. The tribunal was told, and it accepted, that it was a different line manager and different employee relations adviser who were responsible for Mr Moran’s termination payments. Miss Thrope was not in her current role in 2017 when Mr Moran left the respondent’s employment. She would not have had oversight at the time.

[65]Mr Mack said in evidence that the payment to Mr Moran was ‘notorious’ and was a common talking point among drivers and managers. The tribunal put to Mr Mack that the reason Mr Moran’s payment was being much talked about was because it was exceptional. Had it been mundane there would not have been such an interest. Mr Mack did not accept that point. However, the tribunal concluded that this was the reason why Mr Moran had attained notoriety. It was a payment made outside of the bounds of the scheme and that is what made it gossip worthy.

[66]The tribunal was not provided with any paperwork evidencing Mr Moran’s termination. However, the respondent accepted Muss Thorpe’s evidence that Mr Moran received a payment likely to be equivalent to 52 weeks’ pay amounting to something in the order of £70,000 to £80,000.

[67]Having made that concession it was unclear to the tribunal what the claimants were contending that the respondent might be attempting to hide. The claimants never made explicit what exactly it was they were suggesting that the respondent had done. There was no evidence at all that the respondent had applied its mind to disapplying the age cap of 65 under b(iii) when dealing with either Mr Moran or Mr Hanratty.

[68]There was an implication from some of the claimants that they had been rushed out of the door in response to an article in the Sunday Times criticising the number of people on long term sick at train operating companies. This was no more than speculation on the part of those claimants. The tribunal concluded that it was wholly unlikely that any decision was made to rush the claimants’ terminations of employment. All four dismissal were preceded by medical assessments, the receipt of the outcomes of those assessments and the passing of their 65th birthdays.

[69]The tribunal was unsurprised by the evidence that the respondent had not sought to claw back the payment from Mr Moran. In the tribunal’s own experience, clawing back payments made by mistake is frequently seen by employers as an unattractive prospect and that would be particularly so where the payment had been made to a driver who had been forced to retire on the grounds of ill-health. The tribunal also accepted Miss Thorpe’s evidence that taking such a step would be likely to be seen as ‘inflammatory’ by Mr Moran and his union.

[70]The evidence in relation to Mr Hanratty was murky. Mr Marriott’s understanding was that Mr Hanratty had been 64 when the ill-health retirement process started but 65 when it ended. That being so, he was given the benefit of any ambiguity in the trigger point under b(iii) at which the cap at 65 kicked in. There was no evidence whether the progressive month by month reduction in b(iii) in the year between 64 and 65 was applied to Mr Hanratty.

[71]The respondent was in a far better position than the claimants to present evidence settling these questions. It did not do so. The tribunal concluded that Mr Hanratty was also paid when he was not eligible to receive an IHSA payment.

[72]The tribunal concluded that Mr Moran was paid in error as Miss Thorpe said in her evidence. The tribunal rejected the implicit contention that there was any bad faith or any conscious decision to waive the cap at age 65 under b(iii) for Messrs Moran or Hanratty or any conscious decision to treat the claimants differently to either of them.

[73]To the extent that the decisions to apply the cap at age 65 in respect of the claimants were made in the knowledge of how Messrs Moran and Hanratty were treated (which was certainly the case at the time Mr Marriott dismissed the claimants’ appeals) the tribunal finds that they were made on the premise that the more favourable treatment of Messrs Moran and Hanratty was the result of an erroneous failure to apply b(iii) in accordance with its explicit terms.

[74]The tribunal accepts Mr Marriott’s evidence that he understood at the time of the claimants’ dismissals that the payment to Mr Moran had been made in error. And that there was no conscious decision to ignore the age cap in the case of Mr Hanratty. The relevant law The relevant statutory provisions

The relevant law

[75]Section 5 of the Equality Act 2010 (EqA) sets out the characteristics that are protected under the Act. In respect of age, it provides: 5 Age(1) In relation to the protected characteristic of age— (a) a reference to a person who has a particular protected characteristic is a reference to a person of a particular age group; (b) a reference to persons who share a protected characteristic is a reference to persons of the same age group.

(2) A reference to an age group is a reference to a group of persons defined by reference to age, whether by reference to a particular age or to a range of ages.

[76]Section 13 EqA provides as follows in respect of direct discrimination 13 Direct discrimination(1) A person (A) discriminates against another (B) if, because of a protected characteristic, A treats B less favourably than A treats or would treat others.

(2) If the protected characteristic is age, A does not discriminate against B if A can show A's treatment of B to be a proportionate means of achieving a legitimate aim.

[77]Section 23(1) EqA requires that to show direct discrimination an employee will need to show that they have been treated less favourably than a real or hypothetical comparator whose circumstances are not materially different to their own. In direct age discrimination, the comparison must be with someone from a different “age group”.

[78]Section 19 EqA provides as follows in respect of indirect discrimination: 19 Indirect discrimination(1) A person (A) discriminates against another (B) if A applies to B a provision, criterion or practice which is discriminatory in relation to a relevant protected characteristic of B's.

(2) For the purposes of subsection (1), a provision, criterion or practice is discriminatory in relation to a relevant protected characteristic of B's if— (a) A applies, or would apply, it to persons with whom B does not share the characteristic, (b) it puts, or would put, persons with whom B shares the characteristic at a particular disadvantage when compared with persons with whom B does not share it, (c) it puts, or would put, B at that disadvantage, and (d) A cannot show it to be a proportionate means of achieving a legitimate aim.

(3) The relevant protected characteristics are— age; …… Objective justification

[79]Direct age discrimination will be justified (with the effect is will not be amount to unlawful discrimination) if that treatment is ‘a proportionate means of achieving a legitimate aim’. Indirect discrimination will be justified if the application of a provision, criterion or practice (‘PCP’) is ‘a proportionate means of achieving a legitimate aim’.

[80]Assessing whether discrimination is justified involves a balancing exercise between the cogency of the legitimate aim that is being pursued and the discriminatory impact involved. In R (Elias) v Secretary of State for Defence

[2006] EWCA Civ 1293

, the Court of Appeal held that the balancing exercise in establishing an objective justification involves a 3-stage test:• Is the objective sufficiently important to justify limiting a fundamental right?

• Is the measure rationally connected to the objective?

• Are the means chosen no more than is [reasonably] necessary to accomplish the objective?

[81]A helpful summary of the legal principles for assessing objective justification was provided by Elias P (as he then was) in MacCulloch v Imperial Chemical Industries plc

[2008] ICR 1334

. “(1) The burden is on the respondent to establish justification: see British Airways plc v Starmer

[2005] IRLR 862

, para 31. (2) The classic test was set out in Bilka-Kaufhaus GmbH v Weber Von Hartz (Case 170/84)

[1987] ICR 110

, in the context of indirect sex discrimination. The Court of Justice, at para 36, said that the court or Tribunal must be satisfied that the measures must correspond “to a real need …are appropriate with a view to achieving the objectives pursued and are necessary to that end”. This involves the application of the proportionality principle…It has subsequently been emphasised that the reference to “necessary” means “reasonably necessary”: see Rainey v Greater Glasgow Health Board

[1987] ICR 129

, 142-143, per Lord Keith of Kinkel. (3) The principle of proportionality requires an objective balance to be struck between the discriminatory effect of the measure and the needs of the undertaking. The more serious the disparate adverse impact, the more cogent must be the justification for it: Hardy & Hansons plc v Lax

[2005] ICR 1565

, per Pill LJ, at paras 19-34, Thomas LJ, at paras 54-55 and Gage LJ, at para 60. (4) It is for the employment Tribunal to weigh the reasonable needs of the undertaking against the discriminatory effect of the employer’s measure and to make its own assessment of whether the former outweighs the latter. There is no “range of reasonable responses” test in this context: Hardy & Hansons plc v Lax

[2005] IRLR 726

[82]In the same vein, in Chief Constable of West Yorkshire Police and anor v Homer

2012 ICR 704

, SC Baroness Hale said that “To be proportionate, a measure has to be both an appropriate means of achieving the legitimate aim and (reasonably) necessary in order to do so.”

[83]Importantly, when justifying direct discrimination, the stated aim must meet a social policy threshold: Seldon v Clarkson Wright & Jakes

[2012] UKSC 16

. According to the Supreme Court, this is the correct interpretation of Article 6(1) of the Equal Treatment Directive. This threshold for justification does not apply to indirect discrimination.

[84]The tribunal considered the case of Lord Chancellor v McLoud & others

[2018] EWCA Civ 2844

, in particular its analysis on how to approach legitimate aim. The tribunal noted that any legitimate social policy aim must have a rational explanation and that although the respondent has a discretion in determining its aim, it remains a matter for the tribunal to determine whether that aim is legitimate. The aim to be legitimate must not be, for example, capricious or arbitrary, and it must be capable of being understood.

[85]In Lockwood v DWP [2014] ICR paragraph 18, the provision of a proportionate financial cushion to provide for those being made redundant to move to employment and/or receipt of a pension can be a legitimate aim.

[86]An ECJ case, Odar v Baxter Deutschland GMBH

[2013] 2 CMLR 13

, says that not providing additional compensation to those who would be in receipt of replacement income was a legitimate aim.

[87]The aim of saving costs cannot without more amount to a legitimate aim: Cross and others v British Airways plc

[2005] IRLR 423

. However, the Court of Appeal has upheld the principle that in combination with other considerations cost may amount to a legitimate aim: Woodcock v Cumbria Primary Care Trust

[2012] IRLR 491

This is the so-called “costs-plus” principle.

[88]The objective of allocating resources fairly was considered in HM Land Registry v Benson and others

[2012] IRLR 373

. In that case an employer’s decision how to allocate a £12 million budget allocated to fund an early retirement severance scheme involved the refusal of applications from the age group 50 to 54. The EAT upheld the tribunal’s finding that it was a legitimate aim for the employer to refuse those applications with the aim of allocating limited resources fairly across the workforce. This finding was upheld notwithstanding the fact that it would have been possible and affordable to have made a different allocation with a lesser impact on the 50 to 54 age group.

[89]In Loxley v BAE Systems Land Systems (Munitions & Ordnance) Ltd

UKEAT/0156/08

, the EAT said obiter that it was potentially justifiable to exclude from a redundancy scheme older workers who would be immediately entitled to benefits from their pension fund and potentially justifiable for reducing entitlements under a redundancy scheme to use tapering provisions reducing the value of redundancy pay under the scheme between the ages of 57 and 60. At paragraph 34, the EAT said “We reject the claimant’s submission that preventing a windfall cannot be legitimate feature of the scheme. One of the purposes of a redundancy scheme of this nature is to cushion workers from the effects of losing their income. This is not required, or at least not to the same extent, where pensions are paid”

[90]And at paragraph 40, “There can surely be no doubt that the fact that an employee is entitled to immediate pension benefits will always be a highly relevant factor which an employer can properly consider when determining what redundancy rights, if any, the employee ought to receive. No doubt in some, perhaps many, cases it will justify excluding such an employee from the redundancy scheme altogether.”

[91]The position was subsequently reconsidered after the abolition of the default retirement age in 2011. In BAE Systems (Operations) Ltd v McDowell

UKEAT/0318/16

, the EAT observed that “the landscape had changed” such that it could no longer be assumed that redundancy payments to employees over the age of 65 would be a ‘windfall’ since employees may now choose to continue to work beyond the age of 65.

[92]The relevance of the terms of a benefit scheme having been reached through negotiated agreement with a trade union was considered in Pulman v London Borough of Barking

[2010] ICR 333

. At paragraph 40, the EAT states “First, while a Tribunal is certainly entitled to have regard, in assessing the justifiability of a discriminatory measure, to the fact that it has been negotiated with representatives of the workforce it cannot abdicate the responsibility of itself carrying out the necessary proportionality exercise.”

[93]Consideration was given in Seldon to the evidential requirements to establish a justification defence. Per Elias J at para 73 “We do not accept the submissions…that a Tribunal must always have concrete evidence, neatly weighed, to support each assertion made by the employer. Tribunals have an important role in applying their common sense and their knowledge of human nature…Tribunals must, no doubt, be astute to differentiate between the exercise if their knowledge of how humans behave and stereotyped assumptions about behaviour. But the fact that they may sometimes fall into that trap does not mean that the Tribunals must leave their understanding of human nature behind them when they sit in judgment.”

[94]In Air Products plc v Cockram

[2018] EWCA Civ 346

, the Court of Appeal rejected the argument that the employer must show by empirical evidence that potentially discriminatory provisions in a Long Term Incentive Plan achieved the legitimate aim of retaining senior staff. The court held that the Tribunal of first instance was entitled to regard the proposition as “self-evident”. Submissions

[95]Given the nature of this case, the tribunal thought it would be helpful to summarise the parties’ written closing submissions. Respondent’s submissions

[96]Ms Laxton’s written submissions consisted of 164 paragraphs over 26 pages. The tribunal attempts to summarise them as follows.

[97]The respondent provides public transport services and is owned by DfT. There are 400 drivers that are subject to the PDA.

[98]On the question of the operation of the respondent’s finances, Miss Thorpe’s evidence is to be preferred to that of the claimants. Her evidence is better informed and is more objective.

[99]The concept of achieving ‘best value’ is a clearly stated aim of the PDA (and therefore IHSA as well). Mr Campbell’s evidence that the respondent has access to unlimited resources, whether through its public ownership or through its guaranteed profit margin, is unrealistic and should be rejected. The absence of a defined allocation of funds to IHSA is a function of the fact that the respondent cannot know in advance which or how many of its drivers will be deemed medically unfit for work in a given financial year. That is inherent in any scheme of this nature. That is not a sufficient reason for concluding that the respondent cannot show a legitimate aim e.g. seeking to allocate resources responsibly across the whole group of drivers.

[100]The tribunal should acknowledge that, as a general proposition, less robust health is a function of increasing age. That proposition is so obvious that is does not require empirical evidence. The cogency of that proposition is reflected in the respondent’s frequency of medical screening which increases from a medical assessment every 3 years up to the age of 50 progressing to annually after that.

[101]The advent of medical incapacity is more likely to occur in older workers. The ability and/or inclination of people to work reduces with increased age. Both factors underpin the rationale for pension schemes generally.

[102]The tribunal was asked to be sceptical about the evidence of the claimants when they said that they would not have expected to retire before they became too ill to work. Mr Maguire was already stepping away and had already drawn his pension from age 59 and Mr McQueen said he had started to think seriously about retirement from age 60. The tribunal was asked to prefer the anecdotal evidence of Miss Thorpe who said that as a general proposition, most drivers tended to retire at age 62 to 63.

[103]Attention was also drawn to the reluctance of the claimants to take up alternative employment in a non-driving role with fully protected pay. This undermines their evidence that they would have continued to work until such time as their employment terminated because of ill-health.

[104]Ms Laxton acknowledged that the respondent no longer retires drivers compulsorily and that IHSA when originally drafted would have had in mind the then default retirement age of 65. However, Miss Thorpe’s evidence demonstrated that the mechanics of the IHSA remain capable of justifying the age cap.

[105]Notwithstanding the changes to the state pension age, all drivers can access 100% of their pension benefits from age 64 at the latest. For drivers like the claimants, that will amount to pension income at 40% of final salary for life. Also, at 65 the state pension is in reach at age 66. Mr McQueen’s evidence was that his pension income was in the region of £30k as against a final salary of c£70K and that his state pension would be worth c£10k.

[106]It follows that at the age of 65, drivers subject to ill-health dismissal would have immediate access to substantial pension income whereas younger workers in the same circumstances would not. Younger workers would be more likely to have either no access to pension income or access to a pension income subject to a significant actuarial reduction. The occupational pension scheme contains a taper which reduces the value of a member’s pension the farther they are from their expected retirement age.

[107]As the claimants all accepted, the rationale of a pension scheme is to provide an income for life in retirement. All the claimants were in ‘Column A’ at [200] which reflects that they could all access 100% of their benefits from age 60. This is the most advantageous section of the scheme in that regard. The respondent points to Mr McGuire taking advantage of this and drawing down on his pension income to allow him to go part time. Mr McGuire referred to his part time salary as ‘pin money’.

[108]The occupational pension scheme has also been amended since 2011. Even the least favourable section of the RPS allows (in terms of scheme members being able to access 100% of pension benefits) full access from age 64. The occupational pension scheme is a contributory pension scheme meaning that the respondent will have made substantial contributions already into the pension scheme of retiring members.

[109]It is an entirely logical proposition that the very point of the pension scheme is to allow a member to retire with access to 100% pension benefits at an age where robust health is likely to diminish. It follows that a driver/member in older age groups will suffer less of a blow to income if they choose or are forced to discontinue their employment because they are more likely to be able to access 100% pension benefits (or be subject to less of an actuarial reduction) than younger employees. This is an example of inter-generational fairness which is furthered by younger age groups being more able to access financial support under IHSA to ‘cushion the greater blow’ to loss of primary income consequent on ill-heath termination.

[110]Each claimant had access to 6 months full and 6 months half pay under the PDA sick pay arrangements. Entitlement to sick pay in the PDA is a function of length of service which can also be an indicator of age.

[111]The trade unions will have appreciated what they were agreeing to when the PDA was agreed through collective negotiation and at each subsequent point when it was endorsed. Senior union officials have agreed to the terms of the PDA (including IHSA) on no less than 9 occasions. This amounts to repeated endorsement by the recognised unions to the very IHSA provisions which are the focus of these proceedings.

[112]While accepting that this does not exempt the respondent from its responsibilities, the union’s repeated endorsement is nonetheless a relevant consideration: Loxley, Pulham and Palacios del Vila. Miss Thorpe’s evidence was that if negotiated agreements were not followed, this was likely to give rise to an industrial dispute.

[113]The respondent did what it could to update the scheme and made proposals to the unions to that effect. At the same time, the respondent’s position, as Miss Thorpe said in her evidence, was that IHSA remained capable of justification even if there were better ways to structure the arrangements.

[114]The purpose of the IHSA is to provide financial support in the event of ill-health retirement.

[115]A payment under b(i) is to support ill-health retirees who have periods of pensionable service but who are not in the occupational pension scheme for some or all those years.

[116]A payment under b(ii) (the continuing weekly payments) is calculated as a lump sum. The calculation is based on allocating a week’s pay for each block of 5 years’ service. There are enhancements in the form of additional weeks for years of service between at the age of 50 and above, starting with 2 additional weeks for the first year of service, and rising to 40 additional weeks for 10 or more years of service over the age of 50. There are therefore enhancements in b(ii) related to age.

[117]Overall payments under b(i) and/or b(ii) are capped at 52 weeks’ pay. The payment under b(ii) is subject to a tapering provision reducing from a maximum of 52 weeks’ pay down to zero monthly between the ages of 64 and 65.

[118]All the claimants accepted that the payments could not go on indefinitely and that some form of capping was required. None of the claimants complained about the provisions enhancing payments with age in b(ii), their complaint is restricted to the tapering provisions which led to no payment being made to them. Lump sum payments under b(i)

[119]Each claimant claimed significant sums under b(i). Those claims were never withdrawn despite each claimant accepting in cross examination that(a) b(i) applied only to years of pensionable service when a driver was not in the pension scheme; and

(b) they all had the maximum of 40 years of pensionable service reckonable under the scheme rules.

[120]It follows that on their own evidence none of the claimants are entitled to a lump sum payment under b(i). Ms Laxton submits that it is avaricious of the claimants pursue a significant payment to which they are not entitled and doing so is emblematic of the ‘entrenchment and entitlement’ with which these claims have been pursued generally. Messrs Moran and Hanratty

[121]Mr Campbell, Mr McQueen and Mr Mack both reference Mr Moran and Mr Hanratty in their witness statements and Mr McGuire refers in more general terms to persons over 65. In all cases the complaint is that persons over 65 received payments under IHSA whereas the claimants did not.

[122]Such a complaint cannot amount to a legal claim of age discrimination for the simple reason that the claimants and Messrs Moran and Hanratty are all in the same age group. None of the claimants refer in their written evidence to either of the comparators identified by their solicitors when providing further information about their cases (Mr Newton and Mr Batey). Legitimate Aims: Direct Discrimination

[123]Ms Laxton submitted that the public policy threshold in Seldon for the justification of direct age discrimination has been met. Seldon requires that the aim must be something not connected to the employer’s business. Ms Laxton points out that the respondent’s functions are public in nature. There is a public interest in continuity of East Coast Mainline services which depends on effective union relations. The respondent is in part publicly funded and the spending of public funds appropriately is itself a public policy aim.

[124]Ms Laxton further submits that cushioning the blow for younger drivers is pursuing the public policy aim of promoting of intergenerational fairness. This deals with the imbalance between older workers who have access to full occupational benefits and younger workers who have not yet reached that point. She submits that this aim is supported by Cockram in that it eliminates the advantage that one group of workers would have over another group. That she says is an obvious proposition. Legitimate Aims: Indirect Discrimination

[125]The respondent does not rely on a ‘costs alone’ justification. The respondent has not contended that there is a finite pot of resources within which allocations are made. Rather, the respondent’s case is based on a ‘costs plus’ proposition. It is a legitimate aim to address the need to spread funds fairly and to seek ‘best value’ by not ‘cushioning the blow’ for older workers who are impacted less by ill-health retirement. The aims also include avoiding a ‘nuanced windfall’ in the sense that it avoids making a large payment to replace income that is already being replaced through access to 100% occupational pension benefits and when state pension is in near reach.

[126]The aim of cushioning the blow for younger workers who do not have access to full pension benefits is a legitimate aim that can be relied upon independently of any windfall argument.

[127]Ms Laxton acknowledges that there will be some potential advantages for younger workers who may have access to an actuarially reduced pension and who may have a greater ability to retrain. However, the critical point is that younger workers are not eligible for an unreduced pension whereas workers aged 64 (even in the least generous sections of the RPA) have a right to an unreduced pension. That is a significant income representing c40% of final salary for life for those members who have accrued 40 years’ pensionable service.

[128]Put simply, workers with access to unreduced pension have less of a need to receive a large payment than workers who do not have access to an alternative substantial income. As Mr McGuire agreed in evidence, the blow would be greater for someone in their 30s who still had a mortgage to pay. Proportionality

[129]Any alternative to IHSA as applied to the claimants would need to further the legitimate aims of the respondent.

[130]The proposal from the respondent to the unions at [277] would eliminate age factors altogether by substantially reducing the level of IHSA to a flat payment of 20 weeks but made available to all. However, to impose that proposal would be likely to be seen by the unions as the abrogation of the existing IHSA which could result in an industrial dispute and/or other litigation. That would not achieve the aim of maintaining positive relationships with the unions.

[131]Levelling up the IHSA benefits would appease the unions, but it would not achieve the aim of achieving best value or the aim of using funds responsibly.

[132]Mr McQueen’s suggested that the cap at which the payments were reduced to zero could track the state retirement age. However, that would not meet the aim of avoiding a windfall or take into account that at the age of 65 drivers could access their full pension benefits which are substantial and would therefore be in less need of a significant payment to replace lost income.

[133]The effect of the taper and cap at 65 affects the smallest category of workers, representing just 5% of the driver population. It is rare for drivers to retire outside the limits of IHSA. No other cases had come up in the previous 12 years.

[134]It is illogical to contend that because Mr Moran was paid by mistake it then becomes proportionate to disapply the express words of b(iii) in future. Mistakes do not change the facets of how the scheme operates.

[135]The claimants themselves offered different views of how the scheme might be amended which illustrates the difficulties in finding a consistent approach. The claimants were tailoring their proposed solutions to their own particular circumstances. However, the scheme cannot operate on a case by case or ‘means tested’ basis since it must operate for the entire cohort of drivers. Individual solutions would not provide certainty and there would be no ability to plan.

[136]The collective sums claimed by the claimants in these proceedings total £452,740 which is just short of the total paid out to all those under the scheme in the financial year 2020/2021 and exceeds by some margin the total of all payments made to the 23 workers who were eligible for a payment under the scheme in the financial year 2022/2023. It would not be proportionate to pay out these significant sums to workers who also had immediate access to their occupational pensions to which the respondent had also made substantial employer contributions.

[137]Intergenerational fairness is not achieved by weighting the scheme towards older workers without containment. That is a category of worker which is likely to grow as time passes. Claimants’ submissions

[138]Mr Mugliston on behalf of the claimants challenged almost every aspect of the respondent’s case on justification. He challenged the legitimacy of the aims relied on; whether they were in fact being pursued; whether there was any rational connection between the aims relied on and the cut off for any IHSA financial support at age 65; the proportionality of the cut off and the availability of less discriminatory ways in which any legitimate aim could be achieved.

[139]Mr Mugliston structured his submissions by responding to each of the aims relied on separately. (a)Seeking to avoid employees at (or approaching) the age of compulsory retirement (and at the time of that compulsory retirement, accessing retirement benefits under both the respondent’s pension arrangements and the state pension) from receiving financial support under the IHSA (and thereby receiving a windfall);

[140]Mr Mugliston says that this justification must fail because fundamentally there simply isn’t a windfall in the sense of ‘money for nothing’. The payment is because the employees is unable to work for health reasons. But for that health condition the drivers would have continued to work. The income that a driver over 65 would get if they received payments from IHSA would not exceed the income that driver would have received by continuing to work. Hastie is authority for the proposition that pension is not itself a windfall.

[141]Nor does the cap or the structure of the IHSA advance the aim of avoiding any windfall. Each claimant was able to access 100% pension benefits at age 60. The cap does not address the entitlement to payments under IHSA between the ages of 60 and 65. In fact, the IHSA increases b(ii) payments for those with years of service between the ages of 59 and 63 with the effect of creating a windfall for drivers in that age group.

[142]Loxley requires the tribunal to focus on the circumstances of the claimants and it not relevant whether the IHSA might theoretically avoid others receiving a windfall if in their cases there was no such windfall.

[143]The case of Mr Moran demonstrates that there is no certainty or consistent application of the policy. Mr Mugliston describes the respondent’s explanation that this payment was made by mistake as ‘bewildering’. It was authorised by a line manager and approved by Employee Relations. It gained notoriety among drivers. It was not clawed back. The payment ignored both the age cap at 65 and the tapering provisions applicable between 64 and 65.

[144]There is no rational connection between the age of 65 and any other triggering event in the PDA, the IHSA or the RPS. After the abolition of the default retirement age in 2011, age 65 is an entirely arbitrary cut off point.

[145]The cap is disproportionate to the aim of avoiding a windfall since age is no longer a reliable guide as to when employment will end. A cap referrable to age cannot therefore advance the stated objective. State pension age was plainly a part of the justification of age 65 when IHSA was drafted. Given the change to the pension age 65 is rendered an arbitrary age.

[146]In its unamended form, the cap in the IHSA is linked to two outdated concepts: state pension age and the former default retirement age. A less discriminatory and more proportionate way for the stated aim to be achieved would be for the cap to track the state pension age for drivers. Alternatively, a cap which applies a flat limit would also be more proportionate and that was the preferred position of the respondent in its proposals for change communicated to the unions. (b)Seeking to ensure that the funds available for providing financial support to employees suffering from ill health are allocated across the respondent’s workforce in a fair and equitable manner (and thereby promoting fairness between employees of different age groups)

[147]Mr Mugliston submits that this aim is not in fact being pursued. He says that its application is because of contractual obligation inherited over many years. In any event there is no evidence of a fair and equitable allocation of funding across age groups arising from the IHSA generally or its application to the claimants.

[148]Reliance is again placed on Mr Moran and Mr Hanratty. Mr Mugliston encourages the tribunal to approach the respondent’s evidence on these two drivers with suspicion. He says that during the management phase Mr Marriott and Ms Sangha actively misled Mr Mack. Mr Mack was told that no one had previously raised these two cases when that was untrue, and Mr Marriott knew it to be untrue. They also pretended that these cases could not be discussed because they had to be investigated when Mr Marriott accepted in cross examination that he had already investigated them. None of the claimants were given an explanation in their outcome letters.

[149]Further, the respondent continued to be evasive in the litigation phase where despite being part of the claimants’ pleaded case no documents were disclosed. Mr Mugliston says Miss Thorpe demonstrated a ‘staggering lack of curiosity’ about these two cases despite being on notice that they were part of these claims.

[150]The IHSA does not promote fairness. On the contrary,a. it promotes windfalls gained form age 64 to 65;

b. makes payments to younger workers who may well be able to generate income form alternative work even if they are unfit to drive a train and who are in a better position to retrain and to face less barriers to access to the labour market; and

c. is open to exploitation by the respondent who could wait it out until a driver who becomes ill at (say) 63 reaches the age of 65 at which point he would have no entitlement under IHSA.

[151]The cap does not further the objective of fair distribution of resources between age groups because there is no evidence of any resources being diverted from those age 65 or above to younger age groups. There is no ring-fenced funding for IHSA payments so there is in fact no balancing exercise that the respondent needs to undertake. Again, applying a flat limit or tracking state pension age would be more proportionate ways to achieve the aim that the respondent advances. (c) Seeking to provide financial support to employees suffering from ill health in a financially responsible manner, particularly given the respondent’s status as a state- owned organisation

[152]Mr Mugliston relied on the payments to Messrs Moran and Hanratty to support the proposition that this aim was not being pursed at all. No attempt was made to clawback the payment to Mr Moran, despite the respondent’s contention that he had been paid under mistake. The explanation given why Mr Hanratty was paid was ‘cryptic and convoluted’.

[153]The respondent fails to discharge the burden on it of showing that the cap is a appropriate and reasonably necessary to achieve this aim. There is no evidence of the costs saved each year by operating the cap relative to any other measure such as overall staff costs or overall IHSA payments. There is no evidence of the costs of more proportionate means such as a flat rate or tracking the statutory pension age. There is no evidence as in Heskett of the need to ‘balance the books.’ The evidence is that a relatively small number of people would be affected if the cap was disapplied.

[154]It therefore becomes impossible to measure the extent to which the cap contributes to financial responsibility beyond the assertion that it would cost more to make payments to retirees over 65. The respondent is effectively saying that it is cheaper to discriminate. If the continuing weekly payments under b(ii) alone had been made to the claimants, the annual figure would still not have exceeded the costs incurred in financial years 2021/22 and 2023/24.

[155]After the law changed abolishing a default retirement age, people’s plans changed. Older workers must face all kinds of financial realities. Mr McQueen’s income dropped by around 60% and he was locked out of state pension, a third of his oncome in retirement, until he was 66. The respondent and/or central funds are better placed to bear the shortfall than 65 year old compulsory retirees. (d)Cushioning the financial blow to employees in younger age groups who are required to stop (or significantly reduce) working due to suffering from ill health

[156]It is expressly discriminatory to cushion the blow to younger employees while not doing the same for older workers. To the extent that the blow is greater for younger workers, an arbitrary cap at age 65 does nothing to promote this objective. There is no rational link between not paying 65 year olds and cushioning the blow for younger workers.

[157]It would be more proportionate to achieve this objective by operating a flat cap regardless of age or tracking state pension age. Otherwise, 65 year old retirees are left with a gap of up to a year which an IHSA payment should be bridging. (e)Maintaining positive relationships with driver company council representatives and the applicable trade union.

[158]The tribunal must form its own assessment of the justification defence contended for by the respondent. The fact that the PDA was collectively agreed does not change that.

[159]The ongoing pay disputes are far more consequential for the unions and their members than the detail of IHSA payments. The respondent cannot show that the issue of IHSA payments is impactful on employee relations.

[160]The respondent cannot show any progress in its attempts to update the IHSA since March 2023. The respondent cannot blame the union for the failure to progress negotiations when the respondent has itself failed to make any meaningful attempts to do so.

[161]Only one change proposal was put to the unions and that was back in February 2021. That would have involved removing age factors and replacing them with a flat capped IHSA payment payable irrespective of age. That proposal was not rejected by the unions, but the respondent has done nothing further to eliminate the discriminatory treatment in over 3 years.

[162]The application of the cap at 65 does nothing to maintain good employee relations. It was disputed during the appeal by union representatives from both Aslef and RMT and the suggestion was made that it would be better for the cap to track

[163]The history of how the PDA came to be is of limited relevance. Collective agreement per se cannot amount to a defence (Williams) and will not render an otherwise unlawful scheme lawful (Loxley at 42). Nothing can be read into the union’s views on the fairness or proportionality of the IHSA as they were applied to the claimants in 2023. It is for the tribunal to critically appraise the respondent’s justification defence rather than rely on the union’s position (Loxley 42-43). In the absence of evidence that the union considered the discriminatory impact, union negotiation should be given little or no weight (Pulman at 41).

[164]There is no evidence that removing the cap altogether; applying a flat rate of 20 weeks’ pay regardless of age; or tracking the statutory pension age would have jeopardised good working relations with the unions. Discussion and conclusions The claim under (b)(i) IHSA

Discussion and conclusions

[165]These claims must fail on the claimants’ own evidence.

[166]The claimants’ further information identifies the particular disadvantage as not being paid a b(i) lump sum or a b(ii) continuing weekly payment. The schedules of loss all claim substantial amounts under b(i).

[167]However, subparagraph b(i) applies only to years of service that “are not concurrent with membership of the Railways Pension Scheme”. In other words, it applies to missing years of pensionable service. Each claimant accepted that, as at the date of the termination of his employment, he had the maximum of 40 years of pensionable service allowed under the RPS scheme rules.

[168]In these circumstances, subparagraph b(i) IHSA is simply not engaged at all. The reason that b(i) IHSA is not engaged is because each claimant had been in the RPS for the maximum period of reckonable pensionable service allowed under the scheme. It is an express provision of IHSA that ‘Pension Scheme/Fund Membership in excess of 40 years will be treated as non-pensionable service’. To the extent that provision has anything to do with age, it is advantageous to the claimants.

[169]Since there is no entitlement, there can be no detriment and no unlawful discrimination. Any claim based directly on comparison with Mr Moran and Mr Hanratty

[170]The claim forms refer to Mr Moran and Mr Hanratty. It is unclear if they are referred to as comparators. In the claimants’ further information [61], the comparators for the purposes of direct age discrimination are Mr Newton and Mr Batey. No mention is made of either Mr Moran or Mr Hanratty in the further information.

[171]There is no mention of Mr Newton or Mr Batey (the named comparators) in the witness statements of Mr Campbell, Mr McGuire or Mr Mack. Mr McQueen refers to Mr Batey, but only to the effect that Mr Batey took his pension aged 59. The witness statements of Mr Campbell, Mr McQueen and Mr Mack refer only to Mr Moran and Mr Hanratty. The witness statement of Mr McGuire makes a general reference to individuals over the age of 65 (para 41).

[172]It was very clear from answers given in cross-examination that the claimants had a strong sense of grievance about the more favourable treatment that Mr Moran and Mr Hanratty received. Both Mr Moran and Mr Hanratty were over the age of 65 when their employment was terminated on the grounds of ill-health. Unlike the claimants, both Mr Moran and Mr Hanratty received payments under b(ii) IHSA.

[173]It is perfectly understandable why the claimants felt aggrieved about this inconsistency. The respondent accepted that this treatment was inconsistent, at least in the case of Mr Moran which Miss Thrope said was a mistake.

[174]However, the fundamental and insuperable problem is that the claimants’ ‘real world’ sense of grievance cannot give rise to a legal complaint of age discrimination. This is for the straightforward reason that Mr Moran and Mr Hanratty are in the same age group as the claimants. Section 5 EqA makes it clear that direct age discrimination protects less favourable treatment between different age groups. This is no doubt because different treatment of persons in the same age group cannot be because of age.

[175]In these circumstances, any legal claim of direct age discrimination that may be being advanced in these proceedings based on a comparison with Mr Moran and/or Mr Hanratty must fail.

[176]That is, of course, not to say that the tribunal has failed to consider the payments to Mr Moran and Mr Hanratty when looking at the respondent’s reliance on objective justification. In that regard, the tribunal has found as a fact that both Mr Moran and Mr Hanratty were paid in error and that there was nothing more sinister to it than that. The tribunal’s analysis of the effect of Mr Moran and Mr Hanratty’s situation on the issue of objective justification proceeds on that basis. The claim of direct age discrimination

[177]The respondent concedes that the two comparators, Mr Newton and Mr Batey, both received payments under IHSA b(ii) because they were under 65 at the time their employment was terminated due to ill-health. The respondent’s position is that the reason none of the claimants received a payment under IHSA b(ii) was because of the operation of the age cap under IHSA (b)(iii) which reduces IHSA payments to zero once an employee reaches the age of 65.

[178]The tribunal also notes that the respondent accepts that the failure to pay the claimants financial support payments under b(ii) was less favourable treatment of the claimants and a detriment suffered by the claimants

[179]The burden is therefore on the respondent to show that it had a legitimate aim that it was pursuing in a proportionate way within the meaning of sections 13(2) and (19)(2)(d) EqA. It is a question of fact for the tribunal whether this has been established. In the context of direct discrimination, to be legitimate an aim must meet the social policy threshold identified in Seldon.

[180]When referring to any authority upholding or not upholding a particular aim as legitimate or proportionate, it is important to bear in mind that each case is fact sensitive. The tribunal has therefore taken care not to fall into the trap of taking the authorities as anything more than guidance to help it with the task of looking at this case on its own merit at all stages when applying the test in R (Elias) v Secretary of State for Defence

[2006] EWCA Civ 1293

[181]The respondent relies on the following aims: retirement and at the time of that compulsory retirement accessing retirement benefits under both the respondent’s pension arrangements and the state pension from receiving financial support under the IHSA (and thereby receiving a windfall). b. Seeking to ensure that the funds available for providing financial support to employees suffering from ill-health are allocated across the respondent’s workforce in a fair and equitable manner thereby promoting fairness between age groups. c. Seeking to provide financial support to employees suffering from ill-health in a financially responsible manner, particularly given the respondent’s status as a state owned organisation. d. Cushioning the financial blow to employees in younger age groups who are required to stop (or significantly reduce) working due to suffering from ill-health. e. Maintaining positive relationships with the driver company council and applicable trade unions. Did the respondent have one or more of the aims stated?

[182]The tribunal has concluded that it had.

[183]The tribunal concluded that the respondent had the aims relied upon at paragraph 181 (b), (c) and (d) and that those claims were in fact being pursued by applying the age cap of 65. The tribunal accepted Miss Thorpe’s evidence that the respondent genuinely believed that IHSA in applying the age cap had the aim of providing a proportionate financial cushion to those who lose their jobs through no fault of their own. There is less need for that financial cushion when an employee is able draw a pension during the time they are looking for new employment or funding retirement. That is particularly so when the respondent’s occupational pension scheme provided guaranteed defined benefits for life. The tribunal was also satisfied that the application of the age cap had that effect in practice.

[184]While the tribunal accepted that Miss Thorpe also genuinely believed that the aims identified at paragraphs 181 (a) and (e) were also being pursued, in the light of the abolition of the state pension age after Loxley, the tribunal was not satisfied that the IHSA payments would have constituted a windfall even in the more nuanced sense as contended for by Ms Laxton.

[185]The tribunal was also not satisfied on the facts as found that maintaining good relationships with the trade unions was in fact being pursued by maintain the age cap. Even giving due weight to the status of the PDA as a negotiated agreement, endorsed on many subsequent occasions, there was no evidence that the unions had applied their minds to the potential discriminatory effect of the cap or, for that matter, any other aspect of IHSA.

[186]It seemed to the tribunal inconceivable that the union was implicitly endorsing the discriminatory provision in IHSA that treats the retirement age of women at age 60 and men at age 65. Such evidence as there was suggested that both Aslef and RMT advocated tracking the state pension age at the time the IHSA was applied to the claimants in preference to applying the cap at age 65. Had the respondent accepted that suggestion then the tribunal considered it highly unlikely that the unions would have regarded it as an ‘abrogation’ of the PDA.

[187]The tribunal was not prepared to infer from the limited efforts made by the respondent to revise the IHSA that the unions were content with the status quo. The evidence was that the unions’ position in negotiation was that the benefit should be levelled up. While that may very well have been an opening position in negotiation, it is not consistent with satisfaction with the status quo. Were those legitimate aims?

[188]The tribunal concluded that they were. There is substantial legal authority (e.g. Lockwood and Odar) for the proposition that receipt of an occupational pension scheme as a guaranteed source of income means that there is less of a need for a financial cushion on redundancy. The tribunal concluded that the same applies on ill-health retirement. In neither circumstance was the reason for dismissal, nor the consequent loss of income, any fault of the employee.

[189]The tribunal considered it self-evident that a person seeking work with a guaranteed pension has less need of a financial cushion compared to a person seeking work who does not have access to income replacement. The fact that pension income may be 40% of the lost income does not mean there is no cushion compared to someone with no access to pension or access to an actuarially reduced pension.

[190]The tribunal concluded that the other aims that the tribunal accepted that the respondent was pursuing were also legitimate. Fair allocation of resources and allocating resources in a responsible manner seemed to the tribunal to be legitimate aims, not in the Seldon sense but nevertheless logical consequences of seeking inter-generational fairness and, as such, legitimate aims for the purposes of potentially justifying indirect discrimination.

[191]Considered through the lens of age, those aims individually and collectively pursued the overall aim of achieving inter-generational fairness. The tribunal concluded that such an aim amounted to a social policy aim as required by Seldon. It is not an aim related to the respondent’s business. It is an aim focused on the difference in the need faced by different age groups to replace their lost income in the job market. The tribunal was satisfied that these were not ‘cost alone’ aims, they were seeking to achieve a far broader purpose.

[192]The tribunal also considered whether the aims identified were rational, not arbitrary and capable of being understood. The tribunal concluded that they were. Seeking to cushion the blow for workers who were not in receipt of an alternative source of income is both clear and entirely logical. There is no rational basis for excluding pension entitlement as a source of income. Was the age cap of 65 in the IHSA a proportionate means of achieving the identified legitimate aims as required by sections 13(2) and 19(2)(d) EqA?

[193]The tribunal then considered whether the age cap of 65 achieved the aims identified and whether it was a proportionate means of achieving those aims. The tribunal concluded that the age cap did achieve those aims and that it was a proportionate means of doing so for the following reasons.

[194]At the time of its original drafting the age cap was set at 65 because that was the age at which the respondent then compulsorily retired its employees and the age of access to the state pension. However, that does not mean that the respondent is prevented from putting forward an objective justification at the point IHSA was applied to these claimants. An objective justification can also be identified in retrospect (Seldon) so there is no need for it to be the same justification as identified at the time of the drafting or subsequent endorsement.

[195]The respondent’s evidence on compulsory retirement was that it no longer operates such a process at all. It follows that those aspects to any justification at that time can no longer apply at the date the age cap was applied to the claimants. The evidence was that if a driver continued to pass their annual medical assessment they could continue to work if they wished to do so. However, that does not mean that the underlying rationale of allocating resources in favour of age groups with greater need must be disregarded.

[196]The tribunal accepted the respondent’s evidence that most drivers retired around the age of 62-63. This does not suggest that most drivers have a continuing need for financial support over and above occupational pension income. Drivers are wellremunerated at c£70,000 per annum and in the tribunal’s experience an occupational pension scheme producing a pension of 40% final salary is very much towards the upper end of pension provision available in the workplace.

[197]The tribunal treated with caution the evidence of the claimants that they would have continued to work for as long as they had remained fit to do so. There was no evidence that any of the claimants had sought alternative employment after their illhealth retirement. Mr Maguire had already drawn pension and taken part time driving hours and Mr McQueen accepted that he started to consider retirement when he was 60. Some of the claimants were also dismissive of the option of redeployment, even though they would have had their pay protected at the driver rate of pay in any redeployed role. This again did not suggest that any of the claimants had any financial need to maintain their level of income above the level of their occupational health pension benefits.

[198]The tribunal therefore concluded that the age cap at 65 did have the effect of achieving the aims identified.

[199]When considering proportionality, the tribunal is required to conduct a balancing exercise between the importance of the legitimate aim being pursued and the extent of the discriminatory effect. It is for the respondent to justify the difference by reference to the circumstances of their employees taken as a whole.

[200]The tribunal considered the comparator evidence. The evidence of discriminatory impact on the claimants is clear. Unlike the named comparators in the pleadings (Mr Newton and Mr Batey) who were aged 62 at the time of their ill-health retirements, none of the claimants received any financial support under IHSA. The sole reason that they did not do so was because of their age. But for that reason, the claimants would all have received substantial payments up to a limit of 52 weeks’ (pay c£70,000) under b(ii) subject to any tapering provisions if their dismissal had taken place between the ages of 64 and 65.

[201]The tribunal has found some difficulty in carrying out a more comprehensive analysis of the comparators for the purposes of considering discriminatory impact given the entire focus of the claimants’ evidence in chief was almost exclusively on Messrs Moran and Hanratty. All that the tribunal knows about Mr Newton and Mr Batey was that they were aged 62 and received some payments under IHSA. That is, of course, sufficient to establish prime facie discrimination.

[202]Nonetheless, the tribunal has made some common sense assumptions. As general propositions, younger workers have certain advantages in the labour market. Their access to the labour market is likely to be easier than for older workers. That is part of the rationale for the need for protection of older workers from discrimination. Younger workers may be more likely to retrain altogether without suffering the disadvantage of reluctance from a prospective employer to invest in older workers who might have be perceived as having a shorter period of employment over which the employer might gain the benefit from investment in retraining.

[203]The tribunal also notes that this is an ill-health retirement benefit and not, for example, an enhanced redundancy scheme. Drivers accessing this benefit will all have been subject to a medical assessment informing the respondent that they are permanently unfit for driving duties. However, this does not amount to unfitness for any employment at large or that there will be no transferrable skills.

[204]There are also common sense assumptions that apply to workers over 65. Such workers are less likely to have mortgage or other financial commitments such as dependents, or at least to the same extent as younger workers.

[205]The tribunal concluded that it was appropriate for the respondent to take into account the different financial positions, including receipt of pension income, of its employees who were subject to ill-health retirement and appropriate for it to take that into account through the means of reducing the benefits available to those of its employees who had access to 100% pension benefits at the point of that retirement. To disregard the effect on exits of receipt of those pension benefits would prevent a proper analysis of the proportionality of achieving the aims relied upon.

[206]The tribunal then considered the appropriateness and reasonable necessity of the age cap at 65. In the claimants’ cases, they would have to wait between 2 and 10 months to access their state pension at age 66. In broad terms, occupational pension accounted for 2/3rds and state pension 1/3rd of their retirement income. The tribunal has also noted that:a. most drivers choose to retire between ages 62 and 63;

b. employees have access to 100% occupational benefits under the RPS at ages 60, 62 or 64 depending on the division of the scheme they are in;

c. the state pension age is in near reach for those age 65;

d. only a very small number of drivers have been affected by the age cap; and

e. The total amounts (c£450K for all four claimants) claimed under IHSA in these proceedings

[207]The tribunal was not persuaded that age 65 was simply arbitrary and irrational. It was accepted by all but one of the claimants (and the tribunal agrees with most of the claimants and the respondent) that resources are finite. While it is true that there are legacy reasons why 65 was originally chosen as the age cap, the underlying rationale for the aims (which the tribunal accepted as being both pursued and legitimate) needs to be achieved somehow. An age cap is therefore necessary. Age 64 would align with the maximum age at which all employees could access 100% pension benefits but that would not avail the claimants.

[208]Several of the claimants, and their unions at the appeal stage, suggested that a more proportionate way to achieve the same aims would be to track the state pension age. The tribunal was not persuaded by this option. The total amounts claimed by the claimants was £452,740 which as Ms Laxton submitted exceed the total payments under IHSA for all 23 employees in 2022/23. If the age cap were to track the state pension age, this would erode not further the legitimate aims accepted by the tribunal. The same would apply to an even greater extent if age was disregarded altogether.

[209]The tribunal was not persuaded that the absence of a specific budget for IHSA showing that specific resources were diverted to younger workers meant that the respondent could not show proportionality. The nature of an ill-health retirement scheme means operating an allocated budget would be administratively difficult. It is simply not possible to foresee how many people are likely to ill-health retire in any given financial year and at what stage during that year. Resources are inevitably limited as was agreed by most of the claimants. The tribunal accepted the respondent’s position that even without a budget diverting more of an allocated budget to younger workers, achieving best value and using funds appropriately was proportionately achieved by the operation of the age cap.

[210]In all the circumstances, the tribunal concluded that 65 was an appropriate and reasonably necessary age at which to apply the cap.

[211]The tribunal also considered the ‘winners’ in the IHSA structure who were subject to ill-health retirement between ages 60 and 64. The tribunal accepted as selfevident that the likelihood of ill-health increases with age. The increased frequency of medical assessment for drivers from every 3 years before the age of 50 and annually after that reflects this.

[212]The tribunal concluded that the additional years that accrue for service between 50 and 64 reflect the increased risk of ill health occurring in that age group at a time when not all its employees would be able to access 100% of their pension benefits. The tribunal also noted that none of the claimants objected to these enhancements when this age-related advantage under the scheme was put to them in crossexamination. Indeed, most people will pass through different age groups during their employment, meaning that advantages at one stage are offset by detriments at another.

[213]The employer’s task in adopting proportionate means is not an exact science. In any scheme there will be a degree of unfairness. That must be balanced against the need for the respondent to have clear Blue Line rules of entitlement to create certainty, to allow employees to plan and against the fact that it would be unrealistic to means test entitlement or to provide individual tailored packages. The tribunal was not persuaded that the payments erroneously paid to Messrs Moran and Hanratty affected this analysis. Those payments were unfortunate for the integrity of the scheme, but they did not change any of its terms.

[214]The respondent has four divisions in its section of the RPS with a range of retirement ages at which an employee can access 100% of benefits between 60 and 64. Setting the age cap at 64 or 65 would mean that ill-health retirees would by that stage have access to the maximum value of their pension entitlements by way of income replacement.

[215]For the reasons given, the tribunal concluded that each of the requirements of the 3-stage test in Elias had been satisfied with the effect that the tribunal concluded in weighing the balance between the discriminatory impact and the cogency of the aims being pursued, the respondent through the age cap had adopted appropriate means that were reasonably necessary to achieve those aims.

[216]In summary, the tribunal concluded that:a. The respondent had pursued a legitimate social policy aim as required by Sheldon when seeking to justify direct age discrimination: inter-generational fairness.

b. The respondent had also pursued the aims of allocating resources in a fair and equitable manner and using financial resources responsibly.

c. The respondent had discharged the burden of showing that it had an objective justification to both the claims of direct and indirect discrimination.