Indirect age discrimination is where a policy that is applied to all employees negatively affects people in a certain age group.
An indirectly discriminatory policy can be justified if it is a proportionate means of achieving a legitimate aim. A legitimate aim of saving costs, on its own, is not enough to justify a discriminatory policy.
In Heskett v Secretary of State for Justice, the employee was a probation officer. Due to the financial crisis, the government introduced a policy limiting public sector pay increases. Probation officers' pay scales were changed so that employees received only a single pay increment each year instead of three increments. This meant that younger workers took longer to get to the top of the pay scale and were paid less than their older colleagues.
The Employment Tribunal found that the policy was indirectly discriminatory against younger employees but could be justified. The employer had legitimate aims: to reward loyalty and experience, retain some incentive, avoid redundancies and preserve accrued rights. The employer wasn't relying on costs alone (which wouldn’t be justified), but also an absence of means because of the government funding cuts. The changes to the pay policy were therefore a proportionate means of achieving the legitimate aim of breaking even.
This case is a public sector case but provides an interesting angle on the 'cost alone' rule. The 'absence of means' principle might not translate so easily into the private sector, where businesses look to operate at a profit rather than break even. Justifying an indirectly discriminatory policy will still depend on whether there is more at stake than simply cost savings, and any cost-driven approach must be proportionate.