The Employment Appeal Tribunal has rejected a challenge to
the upper age limit of 65 for claiming unfair dismissal and redundancy payments
three years ahead of the implementation date for the new law on age
discrimination. Melanie Thomas reports
Amidst the flurry of new employment laws either implemented or announced
this year, the one that probably stands out more than any other is the
prohibition on age discrimination, due to be introduced at the end of 2006.
The government is consulting on how to implement the European Commission
prohibition on age discrimination, including how to deal with the concept of a
compulsory retirement age…. As the law stands at the moment, employees can be
forced to retire either at the retirement age set by their employer, or the
default age of 65.
However, in parallel with the legislative process, there has been a
long-running piece of litigation about the legality of the age cap of 65 – the
argument being that it is already unlawful because it indirectly discriminates
against men, as more men than women want to work past the age of 65.
The Rutherford decision
The case was originally brought by Mr Rutherford, who was 67 when he was
made redundant. He made a claim against his employer for unfair dismissal and a
redundancy payment. In the course of that claim, he argued that the age limit
of 65 was contrary to EC law because it discriminated indirectly against men.
In August 1999, the Stratford Employment Tribunal agreed that it did. The
EAT, however, disagreed and sent the case back to Stratford to be heard again.
The government joined the second round of litigation last year, but failed to
persuade the Stratford Tribunal to reach a different decision. It then appealed to the EAT, which again has
just overruled the Tribunal on the grounds that it did not apply the law
correctly. The EAT made the following findings:
– The Tribunal had not performed the right statistical analysis
First, it had made a mistake in looking only at the statistics for men and
women aged 55-74 for whom retirement "had real meaning", as opposed
to everyone in the workforce (aged 16-74) who could potentially benefit from
the employment protection rights in question.
Secondly, the Tribunal had incorrectly compared the proportions of men
and women who were not protected by the law (the over-65s), rather than those
who were (the under-65s)
– The Tribunal had also been wrong in rejecting the Government’s
justification defence, which was that the age cap was justified by underlying
social policy considerations, including the idea that someone who had reached
retirement age did not need the same employment protection rights as a younger
person because he or she would have a diminished expectation of continued
The Tribunal rejected this justification because it was inextricably linked
to the state pension age, which is itself discriminatory. This produced anomalies: for example, women
aged 60-64 are entitled to a state pension and a redundancy payment, while men
are not. However, the EAT found that any anomalies were the result of the
unequal state pension age (which was still lawful pending the gradual
equalisation sanctioned by EC law), and not the design of the employment rights
being challenged. As a result, the
government’s justification was not itself tainted by sex discrimination
– The EAT also accepted the Government’s other social policy arguments: that compulsory retirement allowed employers
both to meet the legitimate expectations of younger employees for advancement
and to plan for future recruitment and HR management needs. Importantly, the age limit protected the
dignity of older employees because it allowed employers to retire them, rather
than being forced to dismiss them for performance-related reasons.
Impact of the decision
UK employers are no doubt breathing a sigh of relief that they are still
able to rely on compulsory retirement ages in planning their human resource
needs. However, the case is a shot
across the bows for employers that have not already started to think about how
they are going to deal with the changes being mooted in the Government’s
consultation and, in particular, whether they are going to be able to muster an
argument that their particular business environment has demands that can
justify setting a compulsory retirement age.
Aside from that, the potentially more long-lasting impact of this judgment
lies in its analysis of the law on indirect sex discrimination. In a footnote
to its judgment, the EAT said this was really a claim about age discrimination
that the applicants tried to shoehorn into the contours of a sex discrimination
case. That may be so, but the EAT’s
reasons for rejecting that attempt do nothing to remove the impression that the
law on indirect discrimination is an impenetrable quagmire of legal nuance,
pragmatic compromise and statistical gymnastics.
Melanie Thomas is a solicitor with Lovells’ Employment Group