The Supreme Court has now handed down its judgments in the cases of  Seldon v Clarkson Wright and Jakes [2012] UKSC 16, and Homer v Chief Constable of West Yorkshire Police [2012] UKSC 15, which deal with age discrimination; Seldon covers justification of direct discrimination and Homer indirect discrimination.  Although both cases concerned the Employment Equality (Age) Regulations 2006 (“the Age Regulations”), the Age Regulations are substantially re-enacted in the Equality Act 2010 and these cases remain relevant to all employers. They emphasise that the test for justifying direct age discrimination is narrower than for indirect discrimination. Whereas indirect age discrimination can be justified by, for example, a real need on the part of the employer’s business, direct age discrimination must be justified by reference to public interest objectives which are distinguishable from purely individual reasons particular to the employer’s situation. 

These judgments provide a useful summary of age discrimination case law and current thinking. They include guidance to employers on what are legitimate aims which will justify age discrimination. Employers seeking guidance on how a company retirement age may be justified should note that the Seldon judgment suggests that a mandatory retirement age will only be justified in limited circumstances.

Seldon v Clarkson Wright and Jakes [2012] UKSC 16

Mr Seldon had been an equity partner at a law firm since 1972.  In 2005 he and the other partners adopted a partnership deed providing that, subject to the partners’ agreement to the contrary, partners who attain the age of 65 had to retire from the firm by the end of the following December.  Mr Seldon turned 65 in January 2006 but asked the partners to extend his tenure beyond 31 December 2006.  This request was refused.  He automatically ceased to be a partner at the end of 2006 and subsequently issued proceedings alleging that this forced retirement was an act of direct age discrimination under the Age Regulations.

The Employment Tribunal found that the mandatory retirement age of 65 was an appropriate means of achieving legitimate aims, namely an incentive for staff retention, facilitating workforce planning and limiting the need to expel underperforming partners. The Employment Appeal Tribunal held that the Employment Tribunal had failed to consider whether the aims could have been met by a retirement age other than 65 and remitted the case to the Employment Tribunal on that point alone. Mr Seldon appealed to the Court of Appeal which dismissed his appeal. Now the Supreme Court has also dismissed his appeal and remitted the case to an employment tribunal to consider whether the choice of a mandatory age of 65 was a proportionate means of achieving the legitimate aims of the partnership.

The Supreme Court’s judgment concludes that the United Kingdom has chosen to give employers and partnerships the flexibility to choose which aims to pursue provided that (i) these can count as legitimate objectives of a public interest nature and (ii) are consistent with the social policy aims of the state and (iii) the means used are proportionate, that is both appropriate to the aim and (reasonably) necessary to achieve it.

Recent European Court cases have identified two broad categories which can be accepted as legitimate aims for direct discrimination on grounds of age – inter-generational fairness and preserving the dignity of older workers. The aims identified by the Employment Tribunal were consistent with these. Limiting the need to expel partners was directly related to the “dignity” aim.  In considering whether the treatment of Mr Seldon himself was justified, the Supreme Court held that “where it is justified to have a general rule, then the existence of that rule will usually justify the treatment which results from it,” but expressed a note of caution that all businesses will have to give careful consideration as to what, if any, mandatory retirement rules can be justified.

Homer v Chief Constable of West Yorkshire Police [2012] UKSC 15

Mr Homer had been employed by the Police National Legal Database (PNLD) as a legal adviser since 1995.  In 2005, a new grading structure was introduced which set three promotion thresholds.  Under the old grading system, Mr Homer was at a top grade.  However, under the new structure, he failed to meet the third threshold as he did not hold a law degree (which had not been a requirement when he was recruited). Obtaining a law degree would have taken Mr Homer four years of part-time study, and as he was 62 years old and due to retire at 65, he would not have gained any benefit from having the degree as an employee.  His internal grievances and appeals were dismissed and he brought proceedings under the Age Regulations on indirect age discrimination grounds.

The Employment Tribunal concluded that Mr Homer had been indirectly discriminated against and that this was not objectively justified. However the EAT found that there was no indirect discrimination, but if there had been, it would not have been justified.  Both findings were appealed and dismissed by the Court of Appeal. Now the Supreme Court has found that Mr Homer had suffered indirect discrimination, emphasising that people in his 60-65 age group were disadvantaged because of a reason (retirement) that directly related to their age.

The Supreme Court has remitted the case to the Employment Tribunal to reconsider whether this indirect discrimination was justified. It held that the approach to justification of what would otherwise be indirect discrimination is well settled. A provision, criterion or practice is justified if the employer can show that it is a proportionate means of achieving a legitimate aim. The range of aims which can justify indirect discrimination on any ground is wider than the aims which can, in the case of age discrimination, justify direct discrimination. It is not limited to the social policy or other objectives derived from the equal treatment directive but can encompass a real need on the part of the employer’s business.

Please click here for the Seldon judgment and here for the Homer judgment