In Heskett v Secretary of State for Justice  EWCA Civ 1487 the Court of Appeal considered when costs factors can constitute a legitimate aim for the purposes of justifying indirect discrimination.
The appeal concerned changes to a pay progression policy which were held to have a disproportionate effect on younger employees. The Employment Tribunal found that the aim of those changes was to allow the Respondent to “live within its means”. The Appellant appealed arguing that this was not a legitimate aim, since it fell foul of the “cost alone” principle. The Court of Appeal dismissed the appeal, and held that an employer’s need to reduce its expenditure, and specifically its staff costs, in order to balance its books can constitute a legitimate aim for the purpose of a justification defence. In doing so, it also provided an extensive review of the case law on the ‘cost plus’ principle.