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Kraft Foods UK Ltd v Hastie - Contractual redundancy pay cap and age discrimination [2010] EAT

Applying a cap in a contractual redundancy scheme preventing employees recovering more as a redundancy payment than they would have earned if they remained in employment until their retirement age is lawful (and is not unlawful indirect age discrimination) if it is justifiable as a proportionate means of achieving a legitimate aim, as was the case here.

Mr Hastie worked for Kraft Foods UK Ltd (“Kraft”). In 2008 Kraft commenced a redundancy scheme. Mr Hastie opted for voluntary redundancy under the scheme, the terms of which had been agreed with recognised trade unions. When he was dismissed in December 2008 he had been employed by Kraft for nearly 40 years. The scheme entitled employees to receive 3.5 weeks’ (uncapped) pay for each year of service. In theory this entitled Mr Hastie to £90,100.98. However, a cap applied to the maximum amount payable under the scheme. The total sum could not exceed that which an employee would have earned if they remained in employment, at their current rate of pay, until retirement age (65). As Mr Hastie was 2.25 years away from 65 his payment for voluntary redundancy was capped at £76,560.

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