Age discrimination is the only type of discrimination in the UK where both direct and indirect discrimination may be permitted if “objectively justified”.
On 25 April 2012, the Supreme Court handed down its judgment in the combined cases of Seldon v Clarkson Wright & Jakes1and Homer v Chief Constable of West Yorkshire Police2 which addressed the issues of direct and indirect age discrimination respectively.
Seldon - Direct Age Discrimination
Mr Seldon was a partner in a firm of solicitors which had adopted a partnership deed that provided that partners who reached the age of 65 must retire the following December. Mr Seldon turned 65 in January 2006. His request to remain in the partnership was rejected. He ceased to be a partner in December 2006 and subsequently brought a claim against the firm of, among other things, direct age discrimination.
Regulation 3 of the Employment Equality (Age) Regulations 2006 (the “Regulations”) (which have since been repealed but in essence re-enacted under the Equality Act 2010) provides that direct discrimination occurs when:
“…a person (“A”) discriminates against another person (“B”) if…on grounds of B’s age, A treats B less favourably than he treats or would treat other persons…and A cannot show the treatment…to be a proportionate means of achieving a legitimate aim”.
It was not disputed that the mandatory retirement age enforced upon Mr Seldon was less favourable on the grounds of his age (i.e. direct age discrimination). Therefore the issue in question was whether this treatment could be justified as a “proportionate means of achieving a legitimate aim”.
The Supreme Court held that justification for direct discrimination requires the employer to demonstrate that the less favourable treatment is “objectively and reasonably justified by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are proportionate and necessary”.
Referring to previous European case-law, the Court identified two legitimate aims that have been recognised in the context of direct age discrimination claims, namely inter-generational fairness and dignity. The Court clarified that these legitimate aims are of a public interest nature and are distinguishable from purely individual reasons particular to the employer’s situation. The next stage, once an aim has been identified, is to determine whether that aim is legitimate in the particular circumstances of the case. In other words, the issue must be a real problem, and therefore the aim to overcome it a legitimate one, for the relevant business. Once these requirements have been satisfied, the final hurdle is to ensure that the means chosen are proportionate to achieve the aim.
The Supreme Court agreed with the Employment Tribunal’s findings that the firm in question had the following aims which were legitimate in its particular situation:
- workforce planning;
- staff retention; and
- limiting the need to expel partners by way of performance management.
The first two aims were found to be directly related to inter-generational fairness and the third aim was directly related to dignity. However, the Court clarified that employers are not required to have these legitimate public interests in mind at the time the measures in question are implemented, as examination of the justification for the measures should take place when the difference of treatment is applied to the person bringing the complaint.
Having found that the firm did have legitimate aims for enforcing a mandatory retirement age upon its partners, the Supreme Court then referred the case back to the Employment Tribunal to determine whether a cut-off age of 65 was a proportionate means of meeting these aims. However, the Court also held that the Employment Tribunal must make its decision in light of the legal position in 2006, when the Government default retirement age of 65 was still in force. In other words, given that it was lawful for other employees to be subjected to a fixed retirement age of 65, this may help to prove that the relevant provision of the partnership deed was, at the time when it was applied to Mr Seldon, a proportionate way of achieving the legitimate aims identified.
Homer - Indirect Age Discrimination
Mr Homer was employed by the Police National Legal Database which introduced a new grading structure with three tiers, the top tier of which could only be achieved by employees with a law degree. Mr Homer, who was 62 years old at the time, did not have a law degree and would have taken four years of part-time study alongside his work to obtain one. As Mr Homer was required to retire at 65 (at the time of the case it was still lawful to have a mandatory retirement age), he would have been unable to attain tier 3 status before his retirement. In April 2007 he raised a claim of indirect age discrimination.
The second half of Regulation 3 of the Regulations provides that:
“…a person (“A”) discriminates against another person (“B”) if…on grounds of B’s age, A applies to B a provision, criterion or practice which he applies or would apply equally to persons not of the same age group as B, but (i) which puts or would put persons of the same age group as B at a particular disadvantage when compared with other persons, and (ii) which puts B at that disadvantage…and A cannot show the…provision, criterion or practice to be a proportionate means of achieving a legitimate aim”.
Previously both the Employment Appeal Tribunal and the Court of Appeal, overturning the previous Employment Tribunal decision that Mr Homer had been indirectly discriminated against, had found that Mr Homer was disadvantaged because of his impending retirement, not because of his age. The Supreme Court rejected this reasoning, holding instead that his disadvantage was due to a reason (retirement) that directly related to his age and differentiating between age and retirement was an “unreality”
It found that it would be erroneous to compare Mr Homer with anyone else who was nearing the end of their employment for another reason because leaving work due to retirement was materially different to leaving work for any other reason. This was because, at the time when the default retirement age was still in force, which it was when this claim was made, employees facing a mandatory retirement age did not have the same choice as someone leaving work for another reason to change their mind and stay in employment.
The Supreme Court then turned to the question of justification. It reiterated that the range of legitimate aims capable of justifying indirect discrimination is greater than those available in the context of direct discrimination. Where the issue is one of indirect age discrimination, justification is not limited to social policy or other objectives derived from the Directive, but can “encompass a real need on the part of the employer’s business”. At the Employment Tribunal stage it was found that the employer’s aim for requiring a law degree for tier 3 employees was to facilitate the recruitment and retention of staff of appropriate calibre and it was not in dispute that this was a legitimate aim.
The Supreme Court held that, in determining whether the measure in question used to achieve the legitimate aim is proportionate, an employer must be able to show that it is both (i) appropriate, and (ii) (reasonably) necessary in order to achieve the relevant aim. The relevant question therefore was whether requiring existing employees to have a law degree before they could attain the highest threshold in their career was appropriate to the aims of recruiting and retaining new staff or retaining existing staff.
The Supreme Court acknowledged that Mr Homer was not dismissed or downgraded for not having a law degree. He was merely denied the additional benefits available to those in tier 3 who did have law degrees. However, it was not satisfied that the Employment Tribunal had considered the issue of justification in a suitably structured way by asking itself the right questions regarding whether the legitimate aim of retaining experienced staff in particular (and not just recruiting and retaining new staff) could be appropriately achieved by the requirement of a law degree for the third tier. On this basis, the Supreme Court remitted the case back to the Employment Tribunal.
These decisions highlight the distinction to be drawn between justifying direct age discrimination and justifying indirect age discrimination, with the former being subject to a much narrower test. One significant consideration arising from these decisions is the potentially discriminatory nature of any compulsory retirement policy that an organisation still has in force after the abolition of the default retirement age in 2011. Due to the fact that the case was remitted to the Employment Tribunal, we are yet to see whether a fixed age, such as 65, can be considered reasonable and necessary even if the legitimate aim hurdle can be overcome. However, the ultimate decision of the Employment Tribunal on this matter may not be of great assistance due to the fact that it must take into consideration the now-repealed Government default retirement age which was applicable at the time of Mr Seldon’s retirement.
The ruling in Seldon has clarified that it may be possible to justify compulsory retirement on specific grounds, as long as it is both appropriate and reasonably necessary for an employer to impose it. However, employers should be mindful of the fact that whether the use of a particular age in a particular industry is justified will be very fact-specific, and the legitimate aims relied upon by other employers may not be relevant to their own circumstances.
Where the issue is one of potential indirect discrimination, whilst we have seen above that the test for establishing a legitimate aim may not be as stringent as for direct discrimination, it is clear that the Courts will scrutinise the proportionality of the relevant measure. Therefore employers should pay particular attention to whether or not the legitimate aims that have been identified may be achieved by alternative, non-discriminatory measures.