Andrew Brown of Anderson Strathern looks at age discrimination issues for employers
Until April 2011 the law allowed employers to give employees notification that they intended to retire them on or after their 65th birthday.
Employers who now serve notice to compulsorily retire employees will expose themselves to claims for unfair dismissal and age discrimination.
It is not always unlawful to treat an individual less favourably because of their age. The Supreme Court delivered judgment at the end of April in the long running case of Seldon v Clarkson Wright and Jakes. The judgment has been misreported as confirming that older workers can be forced to retire at 65 if their employers show that the policy is in the "public interest". The matter is not however, that simple.
If the discrimination can be shown to be “a proportionate means of achieving a legitimate aim” it may be “objectively justified” and lawful. This is a two pronged test:
*** Was the organisation pursuing “a legitimate aim”
*** Was the means used to achieve that aim proportionate.
What amounts to a “legitimate aim” will depend on the discrimination involved. In the case of forced retirement at a set age the aim must be a “public interest” aim rather than simply an aim particular to the business. Therefore cost reduction or improving competitiveness would not be a legitimate aim.
The Seldon case involves a partner in a law firm which requires partners to retire at age 65. The firm sought to justify this on the basis that it ensured the retention of motivated Associates by ensuring that partnership became an option after a reasonable period of time. In addition, it avoided performance management of under performing partners. The Supreme Court confirmed that “inter-generational fairness” and “dignity” were legitimate “public interest” aims.
The second aspect of the test involves considering whether the means used were necessary and appropriate. The firm will now seek to persuade the Tribunal that there are no, less discriminatory, measures that might achieve the aim. For example, why make the age 65 and not 67 or 70?
Meanwhile, in the case of Homer v Chief Constable of West Yorkshire Police the Supreme Court has confirmed that a 62 year old was indirectly discriminated against when a new grading threshold was introduced which required the individual to hold a law degree to enter. Despite the fact that he was at the top of the grade until then and regardless of his experience in the role, he was unable to enter the new grade without obtaining a law degree (which he could not do before his scheduled retirement).
The Employment Appeal Tribunal and the Court of Appeal had been persuaded that the reason for the disadvantage was his impending retirement rather than his age. What many view as mere sophistry was rejected by the Supreme Court when it noted what might appear to be obvious - that the individual’s retirement was directly related to his age.
The matter has been sent back to the Employment Tribunal to consider whether the treatment was justified. As this was indirect discrimination rather than direct discrimination, the tests for justification are slightly different from the case in Seldon. Nonetheless, the Tribunal will still have to consider whether there was a “legitimate aim” behind the policy and whether the means used to achieve that aim were “proportionate”.
If an exception is made for Mr Homer, younger workers might fairly argue “That’s not fair. Because he’s older he gets it easy.” The Supreme Court was alive to this. However, that in itself was considered insufficient justification for continuing the discrimination against older workers. There may be other factors which the employer can use to persuade the Tribunal that the policy is justified and therefore lawful. This is a matter for another day but it illustrates how vexed the issue is.
If an employer wishes a policy to apply differently to employees depending on their age, it should proceed with great caution. It may require to show that it is pursuing a “public interest” aim. However, even apparently “age neutral” policies might involve impacting one age group more than another.
For example, requiring that an applicant have ten years’ relevant experience may disadvantage younger employees. Conversely, limiting a vacancy to those within the first five years of their career may disadvantage older individuals.
Employers must consider whether any such impact exists and, if it does, what their “legitimate aim” is behind the policy and what alternative, less discriminatory, means of achieving the aim exist. Without doing so employers might find that they later struggle to justify their approach. The employer is tasked with striking the balance, and persuading the Tribunal that it has done so. In both of the cases discussed above, all is still left to play for.
Andrew Brown is an Associate in Anderson Strathern LLP’s Employment and Pensions Unit.