Browse through the questions and answers on the key legal issues relating to age discrimination and retirement
Here we list a selection of key cases on age discrimination in the workplace, providing a summary of the decision and implications for employers.
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EAD Solicitors LLP v Abrams | Employment Appeal Tribunal | 5 Jun 2015
(UKEAT/0054/15, 5 June 2015)
Issue: Age discrimination: associative discrimination
As he approached retirement, a solicitor in a limited liability partnership (LLP) set up a limited company for tax reasons. He was the sole director and principal shareholder. The solicitor effectively withdrew from the LLP and was replaced by his own company which supplied legal services to the LLP, and in return took the profit share.
When the solicitor reached an age at which he would be expected to retire, the LLP objected to his continuing to supply his services to the LLP and to the company remaining a member of the LLP. He claimed age discrimination claim under the Equality Act 2010, with himself as first claimant and the company as second claimant.
The Employment Appeal Tribunal said that it is not only individuals who are protected under the Equality Act 2010. The Equality Act 2010 prevents discrimination by a person against another person. A legal ‘person’ usually includes a limited company. The age discrimination claim by the company could proceed.
Implications for employers
- This is a very important application of discrimination law which affects employment law and other areas as well.
- Direct discrimination occurs where a legal person A treats another B less favourably than A treats or would treat others because of a protected characteristic.
- An LLP must not discriminate by expelling a member B, or causing B any other detriment. LLP members can include individuals or corporate bodies.
- A ‘person’ in the Equality Act 2010 can include a limited company. The victim of the discrimination does not have to be an individual.
- The Interpretation Act 1978 states that a person includes ‘a body of persons corporate or un-incorporate’.
- Any individual can complain of discriminatory treatment based on the protected characteristic of another person, it is sufficient if there is discriminatory treatment caused by a protected characteristic, or related to it.
- A company can claim discriminatory treatment based on another’s protected characteristic.
- An individual who provides services through a personal service company is protected by the Equality Act 2010 against any discriminatory treatment related to a protected characteristic and by the provisions on contract workers in the Act too.
- Other areas of law such a public services and property law may be affected if there has been discrimination in the provision of goods, services or facilities, or the provision of premises to a company.
- A company, LLP, or charity may claim compensation for discriminatory treatment based on the protected characteristics of others, including members, directors, employees, customers etc.
Seldon v Clarkson | Employment Appeal Tribunal | 13 May 2014
(UKEAT/0434/13, 13 May 2014)
Issue: Age discrimination - forced retirement
A solicitor’s partnership required partners to retire at 65. A partner brought proceedings against his former employer arguing that his forced retirement was an act of direct age discrimination and the firm’s decision to withdraw an earlier offer of an ex-gratia payment was an act of victimisation. The Supreme Court eventually held that compulsory retirement of a partner at 65 could be justified by reference to the partnership’s workplace planning aims. However, for an employer to justify a policy it is not sufficient to show that there is an aim that is capable of being a public interest aim; the employer needs to show that it is actually a legitimate aim in the particular circumstances of the employment. The case was referred back to an employment tribunal, and then to the Employment Appeal Tribunal, to consider whether forcing partners to leave after their 65th birthday (rather than another age) was appropriate and necessary in this case, and whether the firm’s aims could have been achieved by less discriminatory means. After years of litigation, the Employment Appeal Tribunal decided that an enforced retirement age was justified in this case.
The employer could defeat the direct age discrimination claim by showing that retiring a partner at the age of 65 was a proportionate means of meeting its legitimate aims.
One of the arguments raised on the claimant’s behalf was that the given age of 65 could not be proportionate because it was possible for another age to have been used (for example 68 or 70), which would have met the legitimate aims just as well. The Employment Appeal Tribunal confirmed that even if it would be less discriminatory to choose another age, this did not prevent the age of 65 from being appropriate on the facts of this case because otherwise no age could be proportionate as there would always be a less discriminatory age to choose.
The Employment Appeal Tribunal, Court of Appeal and Supreme Court have given detailed guidance on many of the issues surrounding objective justification.
This case report should be read together with the case report on Homer v Chief Constable of West Yorkshire Police. Both cases provide guidance on objective justification for direct and indirect age discrimination. This case is of relevance for employers with mandatory retirement ages following the repeal of the default retirement age, while Homer deals more with the justification in indirect discrimination cases.
Implications for employers
- Since 1 October 2011 it has been unlawful age discrimination for an employer to require employees to leave employment at a particular age by reason of retirement.
- While this case shows that some compulsory retirements can be justified, it is a complex process and the circumstances are fairly restricted where justification can be established.
- Employers should be cautious as this case was decided based on social policy and demographic information available in 2006 and already things have changed so the case could be decided differently today.
- To justify direct age discrimination employers will need to establish legitimate aims. These must be consistent with ‘social policy objectives’, and not just reasons specific to an individual employer’s situation.
- This decision does not mean employees can be forced to retire at 65 in all cases. There is no fixed rule that 65, 70 or any other age is a justifiable retirement age.
- It is challenging to decide on a specific retirement age for any employer, but the precise age is not completely critical. Any retirement age needs to be decided on the basis of the needs of the particular organisation.
- Relevant factors for employers to consider include whether the employees had consented to the retirement age used, if the retirement age used is the same for all staff or if different ages apply to some and whether the State Pension Age at the time is the reason for choosing the particular age. Other important factors include whether the employer needs to incentivise junior staff to stay with the employer, the need to be congenial when retiring staff, and the need for succession planning.
- The employment tribunal and Employment Appeal Tribunal may have reached a different decision if the claimant had been retired after the removal of the default retirement age of 65 (which provided useful guidance at the time).
- Any employer that has decided to retain a policy of compulsory retirement should review this policy, and should be reconsidering if it needs a retirement age at all and if so, whether it can be justified.
- Employers should not make generalised assumptions about competence based on what they think employees can and cannot do as they get older.
- However it is possible to justify compulsory retirement on specific grounds and the legitimate aims of such an age must be carefully thought through.
- Employers can have their own retirement age, but only if there is:
- a legitimate aim, which satisfies public policy objectives, and
- the employer’s own internal objectives, and
- the employer has sufficient evidence to justify the age and system it has adopted.
- Following this case it may be possible for private employers to justify a retirement age for some employees, but not necessarily for the whole workforce and not necessarily the same age, in the same way, for all types and ages of employees.
- The employer’s aims must be consistent with the government’s approach. While employers can rely on aims linked to social policy aims, they cannot rely on purely personal business aims.
- Acceptable social objectives include fairness to all generations and dignity.
- Legitimate objectives can include workforce planning ensuring that more junior staff have the opportunity of promotion and maintaining a congenial and supportive working environment. These aims are capable of justifying a mandatory retirement age.
- Other legitimate objectives may include facilitating succession planning with realistic long term expectations as to when vacancies will arise.
- There must be evidence to support a contention that the performance of workers is likely to tail off at 65.
- As far as proportionality is concerned, the evidence to justify age discrimination must show that there is no other appropriate way and the benefits to the employer must outweigh the discriminatory effect on the employee.
- In this case a retirement age of 65 was proportionate because the retirement age had been agreed to in the most recent partnership agreement, no partners had disagreed and the partners were in an equal bargaining position. The age chosen did achieve the aims of the partnership and there was nothing to suggest that any other age would have been less discriminatory. The risk of associates leaving because of lack of progression was relevant.
- If an employer has never experienced difficulties in recruiting younger people and in reality the problem is retaining too many expensive older and more experienced workers, then that aim of workforce planning may not be legitimate for that particular business.
- If an employer already has sophisticated performance management systems, it may not be able to show that it is legitimate to adopt a retirement age for some part of the workforce.
- An exception in the Equality Act 2010 enables employers to cease providing certain benefits to employees at the age of 65 such as life assurance, health insurance and income protection insurance.
- Employers should give serious thought to a retirement age and benefits, look at their own past experience and that of similar firms and be able to rationally explain the chosen age.
- Employers should carefully document any deliberations about possible legitimate aims and the rationale for selecting a certain age which will be disclosed in the event of litigation.
- An employer does not have to have considered justification when the allegedly discriminatory act or provision occurred and can still try to justify that subsequently. (Although as a matter of best practice it is better to consider justification at the relevant time and to document the best possible rationale for the decision.)
- If an employer decides they can justify a retirement age they should follow a fair process with for example, six months' notice reminding of retirement, a right to ask for an extension and so forth as there will still need to be a reasonable process around a dismissal to avoid unfair dismissal and age discrimination claims.
- For any employer to explain why it had chosen, 70, 66, 65 etc as its compulsory retirement age is likely to be extremely problematic. The reality is that justifying a compulsory retirement age now is going to be extremely challenging.
- Many employers will find it easier to have abolished any fixed retirement age and use voluntary retirements combined with performance management procedures where necessary.
Lockwood v Department of Work and Pensions | Court of Appeal | 11 Oct 2014
 EWCA Civ 1195
Issue: Age discrimination – voluntary redundancy
A 26-year old employee with eight years’ service took voluntary redundancy and received just under £11,000. However, under the scheme rules, if she had been 35 or over her redundancy package would have been £17,000 more.
She claimed direct age discrimination against the Department for Work and Pensions (DWP). Unlike other forms of discrimination, direct age discrimination can be justified. The DWP argued that it was justified in treating the older workers more favourably, as the older age group would have more family commitments and find it harder to secure alternative employment. The Court of Appeal held that although there was direct age discrimination between the two comparator groups, the differential in payments was justified and the claim for discrimination would not succeed overall because:
- Statistical evidence showed the comparative difficulties faced by older workers after termination of employment.
- The difference in redundancy payments to the older workers was a proportionate means of achieving a legitimate aim.
- Social policy objectives could be legitimate aims even if they had nothing in particular to do with the employer’s business. Here the social policy objective was to help older workers who find it more difficult to get alternative employment.
Implications for employers
- This case was decided under the previous legislation but the principles would remain the same under the Equality Act 2010.
- A voluntary redundancy scheme with different severance payments for different age groups may be objectively justified if they are a proportionate means of achieving a legitimate aim.
- Significant differences between the sums paid to younger and older employees on termination may be justified in some cases, but in others they could still be direct age discrimination.
- It is still safer for employers to avoid age discriminatory redundancy schemes.
- If employers do apply disparate treatment on age grounds, they must be able to prove that this is a proportionate means of achieving a legitimate aim.
- Employers may consider legitimate aims in relation to enhanced redundancy payments including encouraging and rewarding loyalty, workforce planning and progression, protecting older workers against job market disadvantage, maintaining good industrial relations, a contented workforce and preventing employees receiving a windfall.
- Deciding the correct age level to apply an increase (in this case it was over 35) is difficult, but necessary to demonstrate proportionality. It will not automatically be 35 in all cases.
Jessemey v Rowstock Ltd | Court of Appeal | 26 Feb 2014
 EWCA Civ 185
Age discrimination – post employment victimisation
The claimant was dismissed on the grounds of retirement when he was 65. His employer failed to follow the statutory procedures relating to age-related retirement. He then applied to a recruitment agency, but received a very poor reference from his former employer. He claimed unfair dismissal, age discrimination and post-employment victimisation, contending that he had been given a bad reference because he had brought a claim for age discrimination.
Before the Equality Act 2010, UK discrimination law expressly covered post-employment victimisation. This is required by EU law anyway. However, the wording of the Act says that direct discrimination and harassment which happen after employment has ended are covered, but post-employment victimisation appears to be expressly excluded due to a drafting error.
The claimant argued that the Act should be interpreted as covering victimisation that occurs after employment, based on European law. The Employment Appeal Tribunal held that the Act does not cover post-employment victimisation. However the Court of Appeal ruled that the apparent failure of the Act to ban post-termination victimisation was a drafting error and that post-employment victimisation was unlawful. Reading the Act without reference to its context suggests post-termination victimisation is not prohibited. However, taking a logical approach and looking at the proper contextual materials then it seems equally clear that is not the result which the draftsman intended. The explanatory notes to the Act said that post-termination victimisation was intended to be proscribed and if post-termination victimisation were not included, the UK would be in breach of its EU obligations. There was also no rational basis for treating post-termination victimisation differently from other types of post-termination discrimination and harassment.
Implications for employers
- The Equality Act 2010 is to be interpreted as covering victimisation that occurs after an employee has left employment, because previous discrimination legislation did prohibit such conduct and despite the fact that the wording in the Act is unclear.
- It appears that the Act should cover post-employment victimisation – victimisation does apply post-employment and the Act should be amended to reflect this.
- As a matter of good practice, employers should avoid victimising ex-employees who have raised issues about discrimination and the law is likely to change in the near future anyway.
- The UK has an error in discrimination law protection and some employers and the government are vulnerable to EU claims, as EU law prohibits post-employment victimisation.
- The government should now amend the Act. The error was spotted when the Act was still in draft form, but the government said that post-employment victimisation was intended to be covered if the Act was read as a whole, together with European case law.
- It is perhaps more sensible for employers to follow the Equality and Human Rights Commission’s Code of Practice, which states that former workers are protected from victimisation.
- In the short term, other discrimination claims, such as harassment, can be made by ex-employees so post-employment conduct which could be victimisation could be claimed, dressed up as a different discrimination claim.
Homer v Chief Constable of West Yorkshire Police | Supreme Court | 25 Apr 2012
 UKSC 15
Age discrimination – qualifications requirement
The claimant was a legal adviser with the police national legal database. He claimed indirect age discrimination because the promotion criteria required him to have a law degree. However, he did not have enough time to complete a law degree before his retirement and he alleged this was age discrimination.
The Employment Appeal Tribunal and Court of Appeal both ruled that his disadvantage was caused by his impending retirement, not his age. However, the Supreme Court held that he was indirectly discriminated against. The employment tribunal will now reconsider the issue of whether the promotion criteria was justified.
This case report should be read together with the case report Seldon v Clarkson. Both cases both provide guidance on objective justification for direct and indirect age discrimination. Seldon is of relevance for employers with mandatory retirement ages following the repeal of the default retirement age. Homer deals more with the justification in indirect discrimination cases.
Implications for employers
- If an employer has any requirement that works to the comparative disadvantage of a person approaching any compulsory retirement age this will be indirectly discriminatory on grounds of age. Age discrimination is the only type of discrimination where direct discrimination can be justified (as well as indirect).
- There are limits on the ability to justify direct discrimination.
- The range of aims which can be used to justify indirect discrimination are wider than the aims which can justify direct age discrimination.
- The range of aims that employers can use as justification are not limited to social policy matters. A real business need on the part of that employer alone may be sufficient.
- Deciding if the discriminatory criteria can be justified, involves balancing the impact on the older employee or group of employees who are affected, with the importance of the aim to the employer.
- When justifying indirect discrimination, the Supreme Court’s judgment applies to age cases and claims of indirect discrimination based on other sorts of discrimination as well.
- Employers should think carefully about their reasons for imposing rigid requirements and qualifications. If a qualification, such as a degree, is regarded as desirable, a flexible approach may be better. For example, requiring a high level of experience may be an acceptable substitute. However employers will then have to consider the extent to which this be discriminatory against a younger age group.
Woodcock v Cumbria Primary Care Trust | Court of Appeal | 22 Mar 2012
 EWCA Civ 330
Age discrimination – early retirement
The Chief Executive of a primary care trust was affected when several primary care trusts (PCTs) were the subject of mergers and economising measures.The chief executives of the merging PCTs had to apply for new chief executive roles. The Chief Executive’s application was unsuccessful and eventually he was informed that he was formally at risk of redundancy. Before one of the consultation meetings the employer realised that the Chief Executive was due to turn 49 within two weeks. He had a 12 month notice period, and if he was still employed at the age of 50 he would qualify for early retirement on enhanced grounds, at a potential cost to the trust of between £500,000 and £1 million. The trust ignored its normal redundancy consultation and gave him his 12-month notice of redundancy, to guarantee that his employment would terminate before he turned 50. In due course he was made redundant and received a redundancy payment of £220,000. He claimed automatically unfair dismissal (for failure to follow the then applicable statutory dismissal procedures) and age discrimination. The central issue, therefore, was whether the Trust’s discriminatory treatment of the Chief Executive was justifiable as being a proportionate means of achieving a legitimate aim.
The matter eventually reached the Court of Appeal which sided with the employer. Although the decision to issue notice of dismissal to the Chief Executive was less favourable treatment on grounds of age, taking account of the cost saving was justified in this case as being a proportionate means of achieving the legitimate aim of making redundancies.
Implications for employers
- The implications of this case are complex, but essentially if the age discriminatory dismissal of an employee is simply to save costs then that is not sufficient justification for discriminating against the employee.
- However, if the employer has another aim, for example a genuine decision to terminate employment on the grounds of redundancy (as it was in this case) then the dismissal may be justified.
- For objective justification to be established there must be more to the aim than just saving costs. However the fact that costs have also been taken into account by the employer does not prevent the employer from demonstrating that it also has a legitimate aim.
- Employers should still follow the normal redundancy process and not attempt to circumvent the process in this way.
- In age discrimination cases a ‘cost plus’ approach may assist employers to defend their actions. This means that costs alone will not justify discrimination. Costs plus another factor may justify it.
- It is not clear what factors in addition to cost may justify discriminatory behaviour. However it appears that a very low threshold may satisfy the ‘costs plus’ test.
HM Land Registry v Benson | Employment Appeal Tribunal | 13 Oct 2011
Age discrimination – early retirement
The Land Registry needed to reduce staff, so offered a voluntary redundancy or early retirement scheme with enhanced benefits. There were too many applicants and, as the budget was only £12 million, there had to be a selection exercise. The main selection criterion was who was the cheapest to dismiss. This had a disproportionate impact on employees in the 50 to 54 age group, who would get early retirement on an unreduced pension. These employees claimed indirect age discrimination. The Employment Appeal Tribunal held that the budget was a proportionate means of pursuing a legitimate aim. The Land Registry was therefore justified in its age discrimination against employees aged 50 to 54.
There was also a linked sex discrimination claim which succeeded, as the exclusion from selection of an employee on a career break was found to be indirectly discriminatory on grounds of sex. While the employer’s selection criteria was capable of being justified, the failure to notify the employee was not proportionate.
Implications for employers
- Employers can ‘objectively justify’ indirect discrimination by showing that the discrimination complained of, is ‘a proportionate means of achieving a legitimate aim’.
- In most cases a legitimate aim is not too problematic for employers; the difficult aspect is assessing proportionality.
- Proportionality requires evidence to support the correct balancing exercise between the employer’s business needs and the discriminatory impact of achieving those needs.
- A criterion based on cheapness can sometimes be justified, especially if as in this case the employer has no real alternative.
- Although earlier cases have indicated that costs alone could not justify discrimination, the budget was seem differently in this case as the £12 million limit represented a legitimate aim and this had to be weighed against its discriminatory impact.
- However the decision is restricted to these facts and employers cannot confidently assume that a costs only justification will always succeed.
- An employer’s decisions about how to allocate financial resources are still a legitimate aim even if the employer could have afforded to make a different allocation of resources with a lesser impact on the class of employees.
- Employees on career breaks should be treated in the same way as other employees in a redundancy selection exercise.
Prigge v Deutsche Lufthansa AG | European Court of Justice | 13 Sep 2011
Age discrimination – retirement ages
This case concerned a German airline which had signed up to a collective agreement that prohibited all of its pilots from working after they had reached the age of 60. Three of the pilots, whose employment contracts automatically terminated on their 60th birthdays, claimed the rule amounted to unlawful age discrimination.
The German court asked the European Court of Justice (ECJ) if this prohibition contravened the age discrimination provisions of the Equal Treatment Framework Directive (2000/78/EC). The wider context was that both German and international law permitted pilots aged between 60 and 65 to carry on working if the other members of the air crew are younger than 60.
Any adverse treatment on grounds of age had to be justified as being necessary and proportionate means of achieving a legitimate aim. The ECJ ruled that:
- Potentially legitimate aims include ‘social policy objectives, such as those related to employment policy, the labour market or vocational training,’ but an aim such as air traffic safety does not fall within this. Therefore the airline could not justify the retirement age of 60 because air traffic safety was not a relevant legitimate aim for this purpose.
- Rules intended to avoid aeronautical accidents are related to ensuring public safety. However, as German national law provided for retirement ages of 65, the age of 60 in the collective agreement was not ‘necessary’ to achieve that aim.
- A possible exception relating to ‘genuine occupational requirements’ will only be proportionate in very limited circumstances. Fixing a retirement age at 60 could not be proportionate as it went beyond what was needed to ensure air traffic safety, as the German national law had set the age at 65.
- The collective agreement and enforced retirement at 60 was therefore unlawful.
Implications for employers
- Employers who discriminate against employees on the grounds of age may in limited circumstances justify their actions if they can show ‘a proportionate means of achieving a legitimate aim’.
- This case may have an implication for any mandatory retirement ages adopted in the UK following the abolition of the default retirement age.
- Employers should carefully consider any similar provisions and review why they impose it; assess if their aims are necessary and whether the aims could be achieved in a less discriminatory manner.
- Employers must provide clear, objective reasons for adopting particular ages for particular jobs.
- Employers should regularly audit their retirement policies and procedures in line with current case law decisions.
- An employer can rely on health and safety considerations posed by older employees to objectively justify its own age discriminatory rule.
- However, health and safety cannot usually be a legitimate aim as it is not a ‘social policy objective’.
- This decision could have major implications for employers who will struggle to rely on health and safety grounds as a basis to justify otherwise unlawful age discrimination. Employers with a health and safety reason for adopting less favourable treatment may have to identify another aim that falls within the definition of a ‘social policy objective’, or will have to rely instead on the limited genuine occupational requirement exception.
O'Reilly v British Broadcasting Corporation | Employment Tribunal | 19 Nov 2010
Age discrimination – victimisation
A 51-year old TV presenter was removed from her role presenting the BBC’s Countryfile programme.
When the programme was moved from its daytime slot to a prime time slot on Sunday evenings she was told she would not remain as the presenter. She claimed ageism and was then not offered as much other work by the BBC which she would have expected previously. She claimed direct and indirect discrimination on the grounds of sex and age and victimisation under legislation replaced by the Equality Act 2010. The comparators relied on included three other male BBC presenters of various ages.
Unlike other forms of direct discrimination, age discrimination can be justified. The BBC claimed that its actions were justified by wanting to appeal to a prime time audience, including younger viewers which it alleged was a proportionate means of achieving a legitimate aim.
An employment tribunal held that the BBC had committed direct age discrimination and victimisation and that the discrimination was not justified. The wish to appeal to a prime time audience, including younger viewers, was a legitimate aim but the tribunal did not agree that choosing younger presenters was essential to appeal to such an audience. It was not proportionate to dispose of older presenters simply to cater for the assumed bias of some younger viewers.
The tribunal also held:
- that there was victimisation because the editor of Countryfile magazine must have been told, or inferred, that he should not commission work from the claimant because of her allegations of ageism, and
- protection from discrimination on the grounds of ‘combined characteristics’ was available because it was not necessary for any one protected characteristic to be the sole, or even the principle reason for dismissal.
The tribunal also said it was just and equitable to extend the three-month time limit for bringing discrimination claims, as it was reasonable for the claimant to wait until she was certain that her career with the BBC was at an end before bringing the claim.
Implications for employers
- Employers should remember that unlike the other protected characteristics, both direct and indirect age discrimination can be objectively justified under the Equality Act 2010 so they may be able to justify discrimination.
- However, establishing both a legitimate aim and that the aim was proportionate will not be easy.
- In particular, assuming that customers or clients (or in this case television viewers) will prefer to deal with a younger employee is a dangerous strategy to rely on to justify age discrimination.
- The objective justification defence is limited and employers should use this as a last line of defence rather than as an excuse to discriminate.
- Employers should not assume that just because the three month time limit for bringing a claim has passed that they are definitely safe from a claim. The tribunal can exercise its discretion to extend the time limit in appropriate cases.
Please note: While every care has been taken in compiling these notes, CIPD cannot be held responsible for any errors or omissions. These notes are not intended to be a substitute for specific legal advice.
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