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Employment Alert: Supreme Court leaves door ajar for employers to justify age discrimination
25 April 2012
The Supreme Court (“SC”) has today handed down judgments looking at the provisions protecting an individual against direct and indirect discrimination in the Employment Equality (Age) Regulations 2006 (“the Regulations”). These Regulations were revoked on 1 October 2010, but the relevant provisions are now found in the Equality Act 2010.
The key points for employers are:
- An employer’s legitimate aim for directly discriminating against an individual must be based on both public policy objectives and not just individual business needs (although this hurdle does not appear to be difficult to satisfy); and
- An employer should be prepared for an Employment Tribunal ("ET") to scrutinise closely it’s assertions as to the aim being pursued (including whether it is in fact legitimate in the employer’s particular circumstances) and the means of pursuing the particular aim.
Both cases have now been remitted back to the ET for decisions on justification, arguably the more interesting aspect of the cases for employers seeking to gain a practical appreciation of where the boundaries may lie.
Imposing a retirement age
Mr Seldon, a partner in a firm of solicitors, was compulsorily retired following his 65th birthday in accordance with the terms of the partnership deed. An ET held that Mr Seldon had suffered less favourable treatment as a consequence of his age, but that he had not been directly discriminated against since the retirement age set out in the deed was a proportionate means of achieving certain legitimate aims. Mr Seldon’s appeals to the Employment Appeal Tribunal (“EAT”) and Court of Appeal (“CA") to overturn the ET’s decision failed. The SC has now followed suit, unanimously dismissing Mr Seldon’s appeal.
The SC identified two broad categories of aims that have been accepted as legitimate by the ECJ and which pursue a public interest. These are inter-generational fairness and preserving the dignity of older workers. Here, the partnership’s aims of collegiality and workforce planning were directly related to the social policy aim of sharing out professional employment opportunities fairly between the generations. Limiting the need to expel partners by way of performance management was directly related to the dignity aim. However, the SC has also emphasised that the aim must be legitimate in the particular circumstances – “for example… avoiding the need for performance management may be a legitimate aim, but if in fact the business already has sophisticated performance management measures in place, it may not be legitimate to avoid them for only one section of the workforce”.
The case has now been returned to the ET to determine whether a retirement age of 65 was a proportionate means of achieving the legitimate business aims of the partnership. The SC expressly alludes to the fact that this is an exercise which will require careful scrutiny, but helpfully comments, given the potential for numerous individual direct age discrimination claims to be made in respect of the same alleged discriminatory provision, that “where it is justified to have a general rule [of retiring at 65], then the existence of that rule will usually justify the treatment which results from it [i.e. Mr Seldon’s forced retirement]”.
This ET decision will be of significant interest to employers, bearing in mind the SC’s comments and the fact that the legitimate aims of the partnership in this case are ones which may well apply to other businesses.
Seldon v Clarkson Wright and Jakes (A Partnership)
http://www.supremecourt.gov.uk/docs/UKSC_2010_0201_Judgment.pdf
Imposing a criterion placing an employee of a particular age at a "particular disadvantage"
In October 2005, Mr Homer commenced employment with the Police National Legal Database (PNLD) as a legal adviser. He did not have a law degree but qualified for the role through having experience and a lesser qualification in criminal law. Following a review in 2005, the PNLD established a new career structure with three thresholds. In order to be eligible for the highest pay grade, legal advisers were required to hold a law degree. Mr Homer was refused entry into the highest pay grade on this basis. He complained to the ET that he had been treated less favourably on the ground of his age because, being 61, he would not be able to obtain a law degree before he was likely to retire, unlike younger employees and hence was denied the highest pay grade.
Overturning the decisions of the EAT and the CA that the PNLD's policy did not have any discriminatory impact, the SC made the point that the law of 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 of a particular age. The SC held that Mr Homer was put at a particular disadvantage by the new career structures requirements. Due to his age, he did not have time to get the law degree required to move to the highest pay grade introduced by his employer.
The ET must now decide whether the PNLD can justify the discriminatory effect of the policy. To do so, the PNLD must show the policy pursued a legitimate aim (for example, a business need to attract high quality candidates for legal roles) and that the policy was a proportionate means of achieving that aim (e.g. that an alternative, less discriminatory method could not have been adopted to achieve the same result).
If the ET finds the policy to be unjustified i.e. the requirement to hold a law degree should not be applied to persons in Mr Homer’s position, interesting questions will arise as to how younger employees should be treated. Will making an exception for older employees not then lead to a disadvantage for younger workers competing for the same position?
Homer v Chief Constable of West Yorkshire Police
http://www.supremecourt.gov.uk/docs/UKSC_2010_0102_Judgment.pdf
If you have any queries, please contact your usual Osborne Clarke contact or Catherine Shepherd or Kath Sadler-Smith.
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