The rights of older workers are constantly evolving thanks
to recent case law and forthcoming legislation outlawing age discrimination. Helen
Rice-Birchall examines some issues which may arise
Unfair dismissal & redundancy
Sam is 67 and has worked for Pilkers Plc for 17 years. The company is
facing some difficult times and has just issued Sam with notice of termination
of his employment. The company has selected him because, at 67, he is beyond
the company’s normal retirement age of 65. Consequently, the company believes
that Sam is neither entitled to a redundancy payment nor to bring a claim for
unfair dismissal. He is therefore an obvious candidate for redundancy. Is the
company right? Could it face any potential claim from Sam?
Helen Rice-Birchall comments: By virtue of the Employment Relations
Act 1996, employees have no right to claim either unfair dismissal or a
redundancy payment if they are dismissed after they have reached the normal
retirement age of a person in their position within the organisation in which
they work, or the age of 65 if there is no lower normal retirement age. Therefore,
Sam would not be able to claim unfair dismissal or a redundancy payment.
To that extent, Pilkers Plc is absolutely right. There is, however, now a
possibility that Sam would be able to succeed in a claim of indirect sex
Sam could allege indirect sex discrimination in the same way as an applicant
in the recent case of Rutherford v Town Circle (t/a Harvest)1. Sam, like Mr
Rutherford before him, could bring a claim against his employer on the basis
that the provision barring employees over the normal retirement age from
bringing claims of unfair dismissal and for redundancy payments affects more
men than women because more men than women work up until and beyond retirement.
The employment tribunal, in the case of Rutherford, found that the exclusion
for employees over the normal retirement age from bringing claims for
redundancy and unfair dismissal was indirectly discriminatory and therefore
The employer appealed to the Employment Appeal Tribunal, which remitted the
case to the employment tribunal for further consideration of the statistics and
for the Secretary of State for Trade and Industry to make any representations
concerning justification for the imposition of a recognised retirement age.
On 22 August 2002, the tribunal promulgated its decision dealing with the
statistics on whether the upper qualifying age limit had a disparate impact on
men in the workplace. The tribunal found that the upper qualifying ages did
have a disparate impact, and that the Government could not justify them.
Accordingly, the upper qualifying ages were disapplied and the applications
for unfair dismissal and a redundancy payment were allowed to proceed.
Although this decision is open to appeal, the current position is that the
upper qualifying ages are unlawful and that people who reach normal retiring
age may be entitled to claim unfair dismissal and/or redundancy payments if
they are forced to retire against their will.
Technically, each applicant would need to prove the statistical disparity.
But, in practice, this should be straightforward as the tribunal hearing Mr
Rutherford’s case has annexed the relevant statistics to its decision. As the
decision is a public document, the statistics can be produced as evidence in
Sam could therefore claim indirect sex discrimination in the same way as Mr
Rutherford or he could bring a claim for unfair dismissal and a redundancy
payment on the grounds that the provisions contained in the Employment
Relations Act 1996 preventing such claims are unlawful. In either case, as the
law stands at the moment, his case would be likely to be stayed pending a final
resolution of this matter. This would mean that his claim would be likely to
sit on the shelves of the office of employment tribunals for some considerable
period of time before it was finally decided.
And of course, should it be determined by a higher court that, in fact, the
provisions are not unlawful, then the case would eventually be dismissed.
Pilkers Plc would, however, be taking a big risk if it ignored the potential
consequences of Rutherford.
Potential claims for women?
If Sam was a woman, would she be able to bring the same claim or would
Pilkers Plc be safe?
HR-B comments: As Rutherford is based on a man claiming indirect sex
discrimination, that particular claim would not be open to a woman.
However, if Sam found herself dismissed by Pilkers plc at the age of 67, she
would be well advised to bring a claim for unfair dismissal and for a
redundancy payment on the grounds that the provisions barring such claims are
unlawful. It is likely that her case would then be stayed in the same way as
Johanna, a very successful financial adviser, is now 55. She has
recently begun to notice a definite change in attitude towards her, culminating
with the managing director referring to her as an "old biddy" in a
meeting. Does she have any claim?
HR-B comments: There is currently no age discrimination legislation
which affords Johanna a right to make a claim against her employer in these
circumstances. However, as a result of a European Union Framework Directive,
the Government has until December 2006 to implement age discrimination
legislation, which is likely to be similar in content to existing legislation
outlawing discrimination on the grounds of sex and race. It is therefore likely
to be unlawful to harass a person on account of their age.
A comment such as this may well, once this legislation is in force, entitle
Johanna to bring a claim against her employer, but will not at the moment. Her
only recourse today would be to say that there had been a breach of the
fundamental implied term of trust and confidence, which should exist between
employer and employee. She would need to resign and say that her employer has
constructively dismissed her, or alternatively, if she wished to remain an
employee, bring a breach of contract claim.
Age discrimination claims are currently possible in the United States. One
recent case, that of American Sharon Haugh, who was employed by Shroders, has
been well publicised in the media. Haugh, 56, was sacked by her boss who told
her that he "wanted someone younger". The company now faces a claim
for age discrimination. If successful, Haugh is likely to reap millions of
dollars in compensation, as her annual package was in excess of the equivalent
Sally is 59 and is required to retire on her 60th birthday by a
clause in her contract, which states that all women employees must retire at 60
and men at 65 in line with the state pension age. Sally is not entitled to a
pension from her employer because she only works 20 hours each week. Does she
have a claim?
HR-B comments: Most certainly. First, in Marshall v Southampton &
South West Hants Area Health Authority, the European Court of Justice held that
a policy of dismissing women at 60 and men at 65 was unlawful direct sex
discrimination, even though the reason for the policy is that men and women are
eligible to receive their state pension at that age. This is because the state
pension ages themselves are discriminatory. Employers must ensure they have
equalised any retirement age.
In addition, the Part-time Workers Regulations (Prevention of Less
Favourable Treatment) 2000, introduced in July 2000, requires part-timers to be
entitled to the same access to a company pension scheme as full-timers,
providing they are doing the same job, unless their exclusion can be
objectively justified. Sally would therefore have a right to bring a claim
against her employer for its failure to provide her with a pension comparable
to a full timer doing the same job. The employer would need to justify that
failure to escape liability.
Wisebuy Ltd is recruiting and has stated in its advertisement in the
local press that only applicants aged under 35 need apply. Is Wisebuy Ltd
allowed to do this?
HR-B comments: As there is currently no age discrimination legislation,
employers can, in theory, apply an upper age limit when recruiting. But
employers should be aware of a more hidden trap. In Price v Civil Service
Commission, Mrs Price complained that a requirement of the Civil Service that
applicants for a certain position were under 28 years of age was discriminatory
under the sex discrimination legislation. Price argued that fewer women than
men could comply with that requirement because that is the time when women are
having time off work to have or bring up children. Price won her case.
So, Wisebuy Ltd would do best to avoid such a condition overtly placed in a
job advertisement. And indeed, if it chose to apply these criteria covertly, by
only employing ‘youngsters’, then there could also be the potential for a claim
by a rejected applicant.
1 Rutherford and Bentley v Town Circle Ltd (t/a Harvest) (in liquidation)
and the Secretary of State for Trade and Industry – 2001, IRLR 599
Helen Rice-Birchall is a solicitor at West Yorkshire law firm Last