Three recent judgments - one from the Court of Appeal and two from the Supreme Court - have shone the spotlight on the issue of age discrimination. The key issues from each case are set out below, along with top tips on how you can address them before they become an issue within your organisation.
Before dealing with the cases, it is useful to set out a reminder about the relevant legal concepts.
What type of discrimination is it?
Direct discrimination occurs where a person is treated less favourably than someone else because of a protected characteristic.
This contrasts with indirect discrimination which occurs where a provision, criterion or practice (PCP) puts a group with a protected characteristic at a particular disadvantage when compared with a group that doesn't have that protected characteristic, and where it puts, or would put, the person bringing the employment tribunal claim at that disadvantage.
What are the protected characteristic?
Protected characteristics are: age, disability, gender, gender reassignment, marriage or civil partnership, pregnancy or maternity, race, religion or belief, or sexual orientation.
Is it possible to justify discrimination?
It is possible to objectively justify indirect discrimination by showing that the PCP was a proportionate means of achieving a legitimate aim. Age is the only protected characteristic where it is possible to justify direct discrimination.
Woodcock v Cumbria Primary Care Trust
The first of the run of judgments was issued by the Court of Appeal (CoA). The case was brought by Mr Woodcock, whose post as chief executive of the Primary Care Trust disappeared following a reorganisation. Had he been employed on his 50th birthday, he would have qualified for enhanced pension benefits totalling between £500,000 and £1,000,000. He was entitled to receive one year's notice of dismissal. When he was approaching his 49th birthday, notice of dismissal was served on him. However, this happened without proper redundancy consultation having taken place. Mr Woodcock successfully argued that his dismissal on grounds of redundancy was directly discriminatory on grounds of age. To avoid liability, the Trust therefore had to show that this treatment was objectively justified.
The question for the CoA was whether cost alone could justify a discriminatory act on the part of the employer, or whether an employer needs to be able to point to cost plus some other factor before a justification argument will be accepted.
What did the CoA decide?
The Court made reference to previous case law and decided that it was clear that considerations based on cost alone, or on economic or financial factors, could not justify treatment that was age discriminatory. So, they had to determine whether the employer had made out a "costs plus" justification.
The Court was willing to hold that the legitimate aim of the Trust was its genuine decision to terminate Mr Woodcock's employment on grounds of redundancy. Only part of that legitimate aim was preventing Mr Woodcock becoming entitled to a "windfall" he had no reason to expect. This was particularly so in light of the fact he was only edging closer to getting that "windfall" as the Trust had given him an unusually lengthy period in which to identify suitable alternative employment, and so had been generous with him up to the point of issuing notice of termination.
What does this case mean for us?
This case had a very particular set of facts. However, the upshot for all employers is that, when seeking to justify a potentially discriminatory course of action, you need to ensure you have a "costs plus" argument ready. As things stand, a cost argument on its own will not stand up to scrutiny.
But, that's not all employers need to be aware of in relation to objectively justifying direct discrimination. They also need to pay close attention to what was said in the Seldon case which we deal with next.
Seldon v Clarkson Wright and Jakes
This was a case which sparked a lot of media interest as it deals with retirement ages. It was a case brought by a partner in a law firm who was made to retire at the age of 65. The default retirement age ("DRA") which was in place at the time did not apply to partnerships. So, this left the door open for Mr Seldon to claim he had been directly discriminated against on the grounds of his age when he was forced to retire at 65. Now the DRA has been repealed this case is of wide interest to employers who have chosen to implement a compulsory retirement age in its place.
In this case it was decided that forced retirement at 65 did indeed amount to direct age discrimination and so it was for the employer to objectively justify this policy. The Supreme Court has now ruled that direct discrimination can only be justified by legitimate aims of a public interest nature, as opposed to aims that are simply of relevance to the particular employer.
What does this mean in practice?
Aims of narrow interest to a particular employer might include things like improving competitiveness, increasing organisational efficiency, or their particular security requirements. While these, or a combination of these, might be enough to justify indirect discrimination, an employer will have to point to an aim of far broader significance if it is to succeed in the face of a direct discrimination claim.
The Supreme Court gave the following as examples of the type of aim it might be willing to accept:
- Promoting access to employment for younger people
- The efficient planning of the departure and recruitment of staff
- Sharing out employment opportunities fairly between the generations
- Ensuring a mix of generations of staff so as to promote the exchange of experience and new ideas
- Rewarding experience
- Cushioning the blow for long-serving employees who may find it hard to find new employment if dismissed
- Facilitating the participation of older workers in the workforce
- Avoiding the need to dismiss employees on the ground that they are no longer capable of doing the job, which may be humiliating to the employee concerned
- Avoiding disputes about the employee's fitness for work over a certain age
These cover either "inter-generational fairness", "workforce planning", or "dignity", and so all are seen as fulfilling legitimate social policy objectives.
What was the outcome of this case?
The case has now been sent back to the employment tribunal for it to determine whether the employer can objectively justify imposing retirement at the age of 65. In sending it back, one of the Judges said that he thought it would be proper for the tribunal to take account of the fact that, when the retirement clause was agreed, the DRA was in force. Conversely, we can only speculate that tribunals looking at this same issue in future will take account of the fact that the DRA was repealed.
We will bring you further updates as they are available. In the meantime, you may wish to review your own practices, and consider whether any retirement age you operate could be justified on the type of grounds set out above.
Homer v West Yorkshire Police
Another judgment handed down by the Supreme Court on the same day as that in Seldon has received far less media attention, but it is no less important. The case was brought by Mr Homer against West Yorkshire Police. The 62 year old was a senior legal adviser but, after the Force changed the requirements for promotion, he was unable to achieve the highest pay grade as he didn't have the now necessary law degree, and he didn't have time to get one prior to retirement.
In brief, the Supreme Court made it clear that it will be relatively straightforward for an employee to establish that they in particular, and persons of their age group in general, have been disadvantaged by a PCP and therefore make out a claim for indirect discrimination. However, on the flip side, the Court has also ruled that an employer has a wide ambit when seeking to justify this type of discrimination.
Was the requirement to have a law degree discriminatory?
Mr Homer claimed that the requirement to have a law degree in order to gain promotion indirectly discriminated against him on the grounds of age. The Employment Appeal Tribunal (EAT) and the Court of Appeal (CoA) had found that Mr Homer was indeed put at a disadvantage, but that this was not because of his age, instead it was because of his impending retirement. He was going to be unable to enjoy the benefits of obtaining a law degree because his employment was due to come to an end, and the same would be true of anyone whose employment was coming to an end for whatever reason. However, the Supreme Court has now ruled that this was the wrong way to look at it. The flaw of the EAT and CoA was to ignore the fact that the reason Mr Homer's employment was ending was a mandatory retirement age and therefore was a reason directly related to his age. This would not be the case when, for example, someone left employment due to family reasons. The Court therefore held that Mr Homer had been indirectly discriminated against on the grounds of age.
As the leading judgment in the case noted, the law on indirect discrimination "...is an attempt to level the playing field by subjecting to scrutiny requirements which look neutral on their face but in reality work to the comparative disadvantage of people with a particular protected characteristic."
Could the employer justify the discriminatory
requirement to have a law degree?
The CoA held that an employer has a wide ambit so far as aims are concerned, and that a real business need on the part of the employer may be sufficient as the reason for doing something. However, the treatment must also be proportionate. One aspect of assessing whether this is the case is comparing the likely impact of the criterion on those affected by it against the importance of the aim to the employer.
Mr Homer was not downgraded or dismissed for not having a law degree. Instead, he was denied the possibility of additional pay and benefits which would have come from promotion. An employment tribunal is now going to have to decide whether it was reasonably necessary to deny such benefits to Mr Homer and others in his position in order to achieve the legitimate aims of implementing a new promotion structure.
What should we do in this type of situation?
An employer faced with this type of situation may have decided to make an exception to the rule for people in Mr Homer's position. However, there is a risk that this then puts older workers at an unfair advantage, leading to claims by younger workers. Keeping all ends of the age spectrum happy is undoubtedly a thin line to tread and, while the Supreme Court has laid out the top level principles to be applied in cases such as this, and the judgment of the tribunal will be awaited with interest by employers and their advisers alike, it must be recognised that implementation of any provision, criterion or practice has to be looked at on a case-by-case basis by an employer.
- If challenged, what would you argue?
- Do you have a legitimate aim in adopting a particular course of action and can you explain that to a tribunal?
- Have you considered alternative means of achieving these aims?
- What is the discriminatory effect of each of these alternatives?
- Have you chosen to implement the least discriminatory one in pursuit of your legitimate aim?
If challenged, your arguments are more likely to win out if you have addressed your mind to these questions at the outset, rather than when a copy of an employment tribunal claim form lands on your desk.
Should you require advice on any of the issues raised above, please get in touch with your usual MMS contact, or
Head of the Employment Team
0131 228 7134
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This briefing is written as a general guide only. It is not intended to contain definitive legal advice which should be sought as appropriate in relation to any particular matter.