Rutherford & another v DTI

Rutherford & another v DTI
Unfair dismissal – upper qualifying age limit

The long-running saga of this case involving the upper age limit for claims of unfair dismissal and redundancy payments has been considered by the Court of Appeal. The Court of Appeal has confirmed that the upper age limit is not unlawful.

The upper age limit prevents employees from claiming unfair dismissal or redundancy payments if they are over normal retirement age. This was challenged by two men aged over 65 at the time of their dismissal on the basis that it was indirect sex discrimination because it had a disparate impact on men as opposed to women. Initially, the tribunal found in the employees’ favour, the EAT then allowed the employer’s case and submitted the point for re-hearing. The tribunal once again found in the employees’ favour, which was subsequently overturned in a lengthy judgment by the EAT.

The case turned on identifying the correct pool when deciding whether the upper age limit had a disparate effect on men. The tribunal based the pool on statistical evidence that showed those ages to which retirement had ‘some real meaning’, ie, those between 55 and 74. They rejected the contention by the Secretary of State for Trade and Industry that the correct pool was the entire active working population between the ages of 16 and 79. The tribunal concluded that the upper age limits had a statistically significant disparate impact on men, as more men than women wished to carry on working after the age of 65. There was no significant impact however if the entire active working population was used as the comparison.

Lord Justice Mummery in the Court of Appeal found the tribunal had erred in its approach and instead of focusing on the disadvantaged group – those that were close to retirement age – the tribunal should have used the statistics for the entire national workforce to compare the respective proportions of men and women who satisfy the requirement of being under 65 and able to claim unfair dismissal or redundancy payments. Consideration of statistical evidence relating to the entire working population was appropriate whenever the alleged discriminatory impact of legislative provisions of national application was under scrutiny. The Court of Appeal also held that the tribunal had erred in its reasons for rejecting the Secretary of State’s defence of objective justification. 

Key points

Both the unfair dismissal and redundancy legislation remain as they were. However, all is set to change in 2006 when the age discrimination legislation comes into force. The DTI announced that the publication of the draft regulations will be further delayed until next year to allow more time for additional consultation. One of the major issues causing divide in the government is whether to maintain mandatory retirement ages.

The alternatives under consideration are: a move to a default retirement age of 70 or the outlaw of the use of retirement ages altogether. We must await the publication of the draft regulations for the final decision.

What you should do

• Be aware that whichever option on retirement the Government adopts, employers will have to change the way in which retirement is approached. A career management process will be necessary to ensure that individuals discuss retirement plans with their employers long before they reach this stage and that agreement can be reached on a suitable retirement date.
  
• The age discrimination legislation will have a huge impact on all UK employment practices, as it will be applicable to every worker. The age discrimination legislation will raise many issues in relation to matters such as recruitment, pay and benefits as well as dismissal. Start thinking now about how the legislation will affect you and review your policies on these key issues.