The question of how the tests in the new age discrimination rules will be implemented by the courts has created a fresh area of uncertainty for employers and employees alike. The recent decision of the European Court of Justice (ECJ) in Cadman v Health & Safety Executive will be welcomed by employers and long-standing employees, but employees with shorter service and some women will be less enthusiastic. The case provides a fascinating insight into the way in which the age discrimination rules will interrelate with those against sex discrimination.
The Cadman decision gives us some clues as to how the courts are likely to interpret the exemptions from the Employment Equality (Age) Regulations 2006 ('the Age Regulations'). In particular, under regulation 34 of the Age Regulations, employers are entirely free from age discrimination fears if, during the first five years of employment, they treat employees differently in respect of service-based benefits. Even after this initial period, any such differences will be exempt from the Age Regulations if it 'reasonably appears' to the employer (or, to put it another way, to an Employment Tribunal) that servicebased benefits fulfil a 'business need' of the employer's undertaking, for example 'by encouraging the loyalty or motivation, or rewarding the experience, of some or all of his workers'. This is a low hurdle for employers to surmount.
The question in the Cadman case turned on whether service-based pay scales fell foul of the sex discrimination laws, given that basing rewards on length of service will generally indirectly discriminate against women who, for childcare-related reasons, are liable to have less continuous service.
The ECJ in Cadman held that rewarding experience is objectively justifiable since, as a general rule, length of service goes hand in hand with experience, and experience generally enables workers to perform their duties better. On that basis, employers were free to reward length of service without having to establish its importance in enhancing the performance of the specific tasks entrusted to the particular class of employee in their particular business. In other words, generally, employers do not have to provide objective evidence of a link between length of service and improved performance: it will be assumed.
Although the ECJ's judgment in Cadman was decided in the context of an equal pay claim on grounds of sex discrimination, it reinforces the seemingly relative ease with which employers will be able to defend agerelated claims on the grounds of the exemption. Indeed, employers will doubtless rely upon Cadman to argue that, since the courts' decisions should be mutually consistent, they are entitled to assume that the law recognizes (as practical experience perhaps does not) that there is a link between longer service and improved performance. To argue otherwise would upset the applecart of the law on equal pay, age-related on the one hand, and sex-related on the other. In this light, we await eagerly the first cases on the length of service exemption.