Two steps forward

Age birthday cake iStock 000010115083XSmall 164x219The Supreme Court has handed down two landmark decisions on age discrimination. Phil Allen analyses what they will mean in practice.

The Supreme Court has handed down two judgments, which are the most important legal decisions to date on age discrimination in the UK. In their decisions they have confirmed that an organisation can have a mandatory retirement age and, if the reasons are right, that can be legally justified.

What we still don't know is exactly in what circumstances a retirement age will be upheld as lawful. The decisions also raise some new difficulties for employers in trying to justify practices which have the potential to have a discriminatory impact.

The case of Seldon v Clarkson Wright and Jakes involved a partner in a solicitors firm who was forced to retire under the terms of their partnership deed at the end of the year in which he reached age 65.

This was a decision made precisely because of his age, but the firm argued that they could justify this direct discrimination (as is legally possible with age discrimination unlike the other protected characteristics). The firm said that they had legitimate aims in doing so, including: the need for others to have the prospect of partnership; facilitating workforce planning; and creating a supportive culture by limiting the need to expel poorly performing partners (as partners would retire in due course anyway).

In their decision, the Supreme Court very clearly emphasise that it is harder to justify direct age discrimination than indirect discrimination. This means that there is a lower risk in doing something because of length of service or experience (where age is a factor but not the reason), rather than specifically because your employees are at/over/under a specific age.

This judgment limits the ways in which a retirement age can be justified to objectives which are either: to achieve inter-generational fairness (such as sharing limited opportunities to work in a particular profession fairly between generations); or dignity (such as avoiding humiliation of older workers by needing to dismiss on grounds of incapacity or underperformance). The judgment acknowledges that the dignity objective is much more controversial but nonetheless decides it can be a legitimate aim. The firm's objectives in this case were held to fall within these areas of justification and were found to be legitimate aims.

The Court also emphasises that whether or not an aim is legitimate will depend upon whether it is required in the particular circumstances of the employment concerned.

Taking steps to ensure the recruitment of young people to achieve a balanced and diverse workforce may be legitimate, but steps are only required if there is in fact a problem in recruiting younger workers. Whilst apparently sensible, this element of the judgment means that a company retirement age may turn out to be justified in some industries and not others, or some companies and not others, depending upon the size and demography of the workforce. It also means that any policy will need to be regularly reviewed.

This is going to make it very difficult for you to know with any certainty that you can have a justified retirement age even when we have further case law available as the facts in those cases will differ from your own. What is legitimate for a small employer with a number of older partners, may not be legitimate for you.

The judgment also addresses the fact that identifying a legitimate aim is not enough, an organisation must also demonstrate that the means of achieving it are an appropriate way of doing so and are proportionate.

The Court in this case needed to consider whether this firm had justified this retirement policy and it applying at age 65. Unfortunately this is where the decision stops, as this question has been sent back to the Employment Tribunal to decide.

Helpfully, the Court confirms that the justification for a standard compulsory retirement age in a business needs "only" be for the general policy, not its application to each individual. However to know how widely the ability to have a retirement age may be available, we will need to wait for subsequent cases.

The Supreme Court also determined the appeal in a second age case, Homer v Chief Constable of West Yorkshire. That involved a 62-year-old employee who was unable to move to a role at a particular grade because a law degree was required to do so. He had lots of experience but, in common with many other longer-term employees, did not have a degree.

This requirement was imposed after the employer reviewed its recruitment and reward strategy to encourage more graduates to apply. Mr Homer said that it would take him more time to obtain the degree, than he had left before retirement. He argued this was unlawful discrimination.

This was a claim for indirect age discrimination. The Court (overturning previous decisions) found that the requirement to have a degree did put those aged between 60 and 65 at a particular disadvantage when compared to other workers as they would not be able to get a degree before they retired. The judgment emphasises that a requirement which is to the disadvantage of a person approaching compulsory retirement age is indirectly discriminatory on the grounds of age.

However whether the requirement imposed could be justified has been sent back to the Tribunal to decide. Concerningly in doing this, some of the Court say that as part of the justification argument the Tribunal should consider whether the employer should have made an exception to this policy for Mr Homer.

What does it mean for me?

Nothing in the Seldon decision alters the fact that not having a compulsory retirement age remains the low risk approach for any organisation. In our experience this is the approach that the vast majority of employers have taken since the retirement rules were changed.

However for those of you who have retained a compulsory retirement age or who may want to re-introduce one, this judgment confirms that it is legally possible. How you might justify it and how strong an argument that is for you, will need to be carefully considered in the light of this judgment. In all likelihood, the level of risk you are taking will not be known until we see more appeal judgments which apply this decision to other situations and claims.

The Homer judgment does not stop you having requirements for particular roles which are based upon qualifications. However this decision highlights the importance of those requirements being genuinely appropriate for the role. If particular requirements are more likely to disadvantage older workers the need for them must be carefully thought through.

The Court does admit the possibility that it may be appropriate to make exceptions for older workers particularly if the impact of an exception is to enable older workers to preserve status or seniority or to avoid disadvantage when salary scales are revised. This raises the fairly novel possibility that if you do not treat your employee differently you may not be able to justify the organisation's stance.

Comment

It is important to note that these are decisions of the Supreme Court. They cannot be overturned by any other UK Court and will set the background to any age discrimination case. The judgments emphasise the ability of employers to demonstrate that any practice which may discriminate on the grounds of age can be shown to be a proportionate means of achieving a legitimate aim and therefore lawful.

The Homer case appears to turn equal opportunities orthodoxy on its head. Treating people equally irrespective of their protected characteristic remains the fundamental basis of discrimination law. However in answer to an indirect discrimination allegation, the Supreme Court appears to say that you may need to explain why you have not made an exception when justifying your actions. This is difficult to apply on day-to-day basis, and will inevitably lead to many more legal arguments.

The Seldon judgment is better news for employers and the ability to justify apparent age discrimination appears to have been increased by the words used. Whilst about partnership, this Supreme Court decision is clearly applicable to employment relationships (as it expressly acknowledges).

What it will not do is answer whether you can do something specific which may discriminate on the grounds of age: you will need to still take advice each time. However it does increase the possibility that any practice may be justified and lawful. As for compulsory retirement ages, watch this space, but we now know that having one lawfully will be possible for some (just not for whom and when).

Phil Allen is a Partner at Weightmans. He can be contacted on 0161 214 0504 or by This email address is being protected from spambots. You need JavaScript enabled to view it..