Seldon v. Clarkson Wright and Jakes 2012UKSC16
The Supreme Court has held that the compulsory retirement age contained in the firm’s deed of partnership was a directly discriminatory measure but that it was capable of justification as it was founded on legitimate social policy aims. However, the case was remitted back to the Employment Tribunal for consideration of whether the selection of the specific age of 65 was a proportionate means of achieving those aims in the circumstances of the particular firm. The test for justifying direct age discrimination is now that employers must show (1) they have a legitimate aim, (2) the aim is potentially legitimate in that it is capable of being a public interest aim, (3) the aim is also legitimate in the particular circumstances of the case, and (4) the means chosen to achieve the aim must be both appropriate and necessary.
Key point: All businesses will now have to give careful consideration to what, if any, legitimate policy aims can be justified in their particular business. Employers who have chosen to retain a compulsory retirement age of 65 should review their position in light of this case and again after the Tribunal’s decision. The judgment does not say what retirement age is legitimate.
Requirement to hold a law degree
Homer v Chief Constable of West Yorkshire 2012 UKSC15
On the same day as the Seldon judgment, the Supreme Court gave its judgment in this case holding that restricting promotion to a certain grade of employee with a law degree was indirectly age discriminatory against an employee without a law degree and who did not have time to obtain one before retirement. Mr Homer, who was 62, was disadvantaged and this was directly related to his age and not his impending retirement. The Court also remitted the case to the Tribunal for a decision on justification.
Key point: Employers would be well advised to consider carefully the possible age discriminatory implications of any job requirements before introducing them.
Dismissal to save costs justified.
Woodcock v Cumbria Primary Care Trust 2012 EWCA Civ 330
The Court of Appeal has upheld in this case the Tribunal’s decision that a dismissal by reason of redundancy before Mr Woodcock turned 50 to save the costs of an early retirement pension was justifiable age discrimination. The Court considered that his 12 months’ dismissal notice was served with the aim of giving effect to the Trusts’s genuine decision to make him redundant. It was a legitimate part of that aim for the Trust to ensure that it avoided additional costs and not treatment simply aimed at avoiding costs. By dismissing him before he reached the age of 50 the Trust saved at least £500,000 although Mr Woodcock received £220,000 as a redundancy payment.
Key point: An employer cannot justify discriminatory treatment solely because the elimination of such treatment would involve increased costs. The need for employers to find a cost plus justification therefore remains.
Refusing early retirement justified.
HM Land Registry v Benson and Others UKEAT/0197/11
The EAT in this case held that the employer’s refusal of applications for early retirement from employees aged between 50 and 54 was not unlawful indirect age discrimination. The Registry had £12m to use for compulsory early retirement schemes. The Registry decided to accept applications from employees who would cost the least – the cheapness criterion - and Mrs Benson and four of her colleagues who were aged between 50 and 54 argued they had been indirectly discriminated against on the grounds of age when their applications were refused. They were refused because the cost of providing their benefits under the scheme was higher than that of employees in other age groups. Although Mrs Benson and the others succeeded in their claims before the Tribunal the EAT allowed the Registry’s appeal. Had they been selected they would have received an immediate unreduced pension and were therefore particularly costly. Like the Woodcock case, the prevention of a windfall was a legitimate aim. Although the employees had lost out on a chance to take advantage of a substantial benefit they had no legitimate expectation of receiving such a windfall. Whilst the cheapness criterion was disproportionately unfavourable to Mrs Benson et al the Tribunal’s key finding had been that the Registry had no real alternative to using it. The decision therefore to refuse the early retirement applications was a proportionate means of achieving the business objective of remaining within budget.
Key point: The decision is fact specific and the use of a similarly discriminatory criterion will not necessarily be justified in other cases.
CIPD Guidance on Managing an Ageing Workforce
The Chartered Institute of Personnel Development has launched a free guide “Managing a healthy ageing workforce: A national business imperative”. It focuses on three steps for employers, building a business case, addressing issues for talent management and developing talent management. Complimentary copies are available on request. To view the guide, please click here.