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Age Discrimination


Raymond Levy was denied a job at McHale Legal, despite being the only person interviewed for the role. Mchale Legal said they didn’t give him the job because he was expensive. The Employment Tribunal said that this was age discrimination. “Expensive” was “synonymous with his being an experienced and older solicitor”, and the firm changed the job requirements to suit a more junior solicitor after they decided that Mr Levy was unsuitable. Read more….

In Ewart v Oxford University , Oxford University had a so-called Employer Justified Retirement Age which required all academics and researchers to retire on the 30 September before their 68th birthday, unless they made a successful application for an extension. The ET ruled that forcing Professor Ewart to retire under the policy was unfair dismissal and age discrimination.

[see How to prepare a Scott Schedule for a direct discrimination claim, How to prepare a Scott Schedule for a victimisation claim, How to prepare a Scott Schedule for a harassment claim, How to prepare a Scott Schedule for a sexual harassment claim, How to ask questions about discrimination at work, How to write a grievance about discrimination]

Age discrimination under the Equality Act 2010

Principles of Age Discrimination

Age is a protected characteristic under the Equality Act 2010 which prohibits discrimination based on age. Employment Tribunal claims can be made by people of any age. Recent age discrimination cases continue to establish boundaries around acceptable and unacceptable employment practices in age discrimination terms. The Equality Act 2010 generally outlaws age discrimination amongst the other protected characteristics such as sex, race, disability discrimination etc.

There are four main types of age discrimination: direct and indirect age discrimination as well as harassment and victimisation relating to age discrimination.

[see Proving Discrimination, The Comparator in Direct Discrimination, Direct Discrimination, Indirect Discrimination, Victimisation, Harassment]

Direct discrimination is where you are treated less favourably because of your age or perceived age.

A good example is where an older person might not be shortlisted for a promotion because they are assumed to be of an age where they might not want that level of stress or responsibility or might not be adaptable enough or because an assumption is made that they might not want to work for many more years.

Similarly someone might also not be shortlisted for a job because they are considered to be too young and inexperienced so in all these cases assumptions or stereotypes are being made on their behalf which are based on their age and amount to less favourable treatment. The discrimination here means each of those two employees simply will not be given the opportunity to go for the promotion.

Indirect discrimination is where your employer’s practice criterion provision (PCP), applies in the same way across a group of employees but where the impact would put people of a certain age at a disadvantage when compared with the impact on others of a different age or age group.

A PCP can be anything from a policy, a practice, a treatment, a procedure, a requirement, a rule, an arrangement. The Court of Appeal’s decision in United First Partners Research v Carreras [United First Partners Research v Carreras [2018] established that even an expectation can amount to a PCP.

An example of indirect age discrimination would be a requirement that a job applicant has held a driving licence for a minimum period say, for example, for five years. This apparently neutral practice can apply across the board but impact more on younger job applicants, for example, 20 year olds because they would be unable to meet that requirement.

When is age discrimination lawful?

There are some specific situations where age discrimination is lawful. The Equality Act 2010 sets out a number of specific exemptions that allow employers to provide different treatment in employment on age grounds.

For example, there are limited circumstances where a genuine occupational requirement exists meaning that someone of a certain age can be chosen for a job, for example, hiring a girl to act a part in Annie.

In broad terms, it is possible for employers to offer different pay and benefits based on an employee’s length of service. For example, additional holiday for longer serving employees. If differences in pay and benefits exist for employees with up to five years’ service, this is covered by a specific exemption under the Equality Act 2010 and so it is not unlawful.

When more generous pay and benefits are offered by reference to periods of service of five years or more, the employer must be in a position to show that it fulfils a business need, for example rewarding loyalty.

There are also a number of specific pensions exceptions to the general principle that differences in treatment based on age are unlawful. This is because many pension benefits are formulated, calculated and paid when an employee reaches a certain age. There are certain ways in which pension schemes can continue to operate without constantly running the risk of age discrimination claims.

However, there are many practices which are not covered by the specific exemptions in the Equality Act 2010 and underlying regulations and, in these cases, employers will need to be able to objectively justify the treatment.

When is age discrimination not lawful?

Age discrimination is not unlawful if the employer can objectively justify it. The PCP will not be unlawful where it is shown as a proportionate means of achieving a legitimate aim.

The employer needs to show that the PCP in question is proportionate as a means of achieving the aim of the employer and is also necessary. Usually the objective justification is about showing a business need for the treatment and showing that that business need, that legitimate aim does not have a disproportionate impact on the employee claiming age discrimination (persuading a court or tribunal that, judged objectively, the act is justified, the end justifies the means). This is a balancing act, the employer’s aims on one hand but the impact on the employee on the other.

It is also possible for direct discrimination to be objectively justified. In principle, this means that the same thought process would need to be followed by an employer when defending itself against a claim of direct age discrimination. However, case law has established that the objective justification which needs to be shown when direct age discrimination is alleged must be linked to legitimate aims such as social policy objectives.

ACAS Guidance

The ACAS guidance – Age Discrimination: Key Points for the Workplace sets out some helpful key points around age discrimination. It explains various types of age discrimination (direct, indirect harassment and victimisation) and runs through the various scenarios where age discrimination may happen (recruitment, training, promotion, pay, terms and conditions of employment, performance management, redundancy, retirement, dismissal and flexible working).

The standard or default retirement age was removed in 2011 so an employer cannot, for example, dismiss someone simply on the grounds of reaching a certain age. Employers can retain a normal retirement age, but to do so must in itself be objectively justifiable and these are very rare and very employer specific. As such, employers should assume that employees will remain in the workforce for longer so benefits should not be removed for employees who remain with the business when they reach a certain age unless there are strong objective justification grounds to do so.

[see How to prepare a Scott Schedule for a direct discrimination claim, How to prepare a Scott Schedule for a victimisation claim, How to prepare a Scott Schedule for a harassment claim, How to prepare a Scott Schedule for a sexual harassment claim, How to ask questions about discrimination at work, How to write a grievance about discrimination]

Judges and Firefighters Discrimination Cases

The Court of Appeal decision in judges and firefighters came out just before Christmas 2018. The Government decided across the board to reduce pension costs across the public sector. That was in response to a review of public sector pension provision in 2011 by Lord Hutton which made recommendations for pension arrangements that were more sustainable and affordable in the long term.

In response to that report, a number of changes were made across public sector schemes. In the case of judges from the 31 March 2015, the Judicial Pension Scheme was closed and replaced with a New Judicial Pension Scheme.

At the same time, the Firefighters’ Pension Scheme was closed and replaced with the New Firefighters’ Pension Scheme.

In both cases the new arrangements that were replacing the old ones were less generous. For example, they included lower accrual rates (so people built up less pension in them), they had a higher normal pension age and pension was calculated on a career average basis rather than final salary which is generally less generous for people.

In both instances, transitional protections were put in place to protect some scheme members from the impacts of these changes. In both cases, younger pension scheme members (i.e. those who are further off from retirement) were not offered any protection against the impact of the reforms and this resulted in a lot of them being very unhappy.

More than 200 judges and 6,000 firefighters brought claims before the Employment Tribunal saying that they were treated less favourably than those who were offered protection on the grounds of age and that this less favourable treatment could not be objectively justified.

Female claimants also made a claim for equal pay under the sex equality rule on the basis that the transitional provisions disproportionately adversely affected women.

Certain claimants brought claims of indirect sex and race discrimination on the basis that these transitional protections put women and black and minority ethnic claimants at a particular disadvantage. That is essentially because they have entered the profession later so were generally younger.

The transitional provisions put in place in both schemes gave some active members of the existing and more generous scheme full or partial protection under that scheme by reference to the member’s age.

Older members who were closer to retirement had full protection in terms of their pension rights. What that meant was that they were allowed to remain in their current and more generous pension arrangements and they continued to build up benefits on that basis up to retirement.

Members who were slightly younger had some protection which reduced year on year and that was known as the ‘tapered protection group’.

Members who were younger still (and who would reach normal retirement age after a certain cut off) were offered no protection at all.

The claims came from the unprotected and the tapered protection groups, who argued that the decision to exclude them from either the tapered or the full protection group was age discrimination.

There was a huge financial impact of this different treatment for younger pension scheme members. It was estimated that, for a firefighter who was too young to benefit from the transitional protection, they would need to invest approximately £16,000 to £19,000 a year to provide the same benefits as older members who had been given the same protection.

For judges, because of the combination of the fact that the younger members had no protection, but also the fact that the new pension arrangement offered to them was on a different and less generous tax basis, the costs were estimated to be around £30,000 a year for them to be able to provide similar benefits. The key question here was whether those transitional protections were objectively justified (i.e. were they a proportionate means of achieving a legitimate aim)?

The Government, the Ministry of Justice and the Secretary of State, argued that the transitional protections were designed to protect those who were closest to retirement from the financial effects of the reform. There was speculation that older judges would be more likely to have fixed or concrete plans for retirement which would be difficult to change.

There was also an element of treating all public pensions people consistently because there had been a ten year protective period incorporated into other agreements with trade unions and other public sector workforces.

There was also talk of a ‘moral and political aim’ of being fair to those closest to retirement. In the firefighters’ case, they argued that the moral and political arguments simply ‘felt fair’.

When these cases first went to the Employment Tribunal there were actually contradictory outcomes.

The Employment Tribunal in the judges’ case found in favour of the judges and said ‘yes, this is age discrimination’.

Whereas, in the firefighters’ case, they came to an opposite conclusion (i.e. different tribunal judges making these two decisions). They concluded that actually there was a legitimate aim, it was objectively justified – therefore it was fine in the case of the firefighters.

Both decisions were appealed to the Employment Appeal Tribunal who found in favour of the judges and the firefighters (but for different reasons than the Court of Appeal).

The Court of Appeal held that that the transitional protections were unlawful – they could not be objectively justified and, in both cases, the failure was on legitimate aims (i.e. establishing the first part of the objective justification test). Both younger judges and firefighters had been discriminated against in this instance.

Future benefit liability management exercises

There has been a bit of a trend in the past of compensating older workers – looking at cushioning the blow for those who are closest to retirement, making sure they are not too badly affected because they have really started to focus on and look at their retirement.

In Air Products Plc v Cockram [2018] the Court of Appeal gave guidance on a situation where invested share options are lost or retained depending on the employee’s age. Mr Cockram was a long standing employee of Air Products plc. He retired from the company and he was aged 50 at the time of his departure. Whilst in employment with Air Products he had been a member of the company’s Long Term Incentive Plan (the LTIP). Under this plan he was offered stock options.

At the time of his departure from the company he had unvested options. These options were forfeited because he left the company at age 50. Now, had he retired aged 55 or over, he would not have lost those unvested options and this was because there was a retirement exception in the LTIP’s rules which said that unvested stock options would not be forfeited had the employee left employment on or after the customary retirement age and, for the company, the customary retirement age was age 55.

Mr Cockram bought a claim of direct age discrimination. In particular he was not happy because he personally had a protected pension age of 50 in his defined benefit pension scheme with the company. He felt that he should have still had those share scheme options available to him when he left at age 50 from the company.

Air Products accepted that the rule in the LTIP was direct discrimination. It was direct discrimination because an employee in the same position as Mr Cockram but aged 55 at the time of his departure rather than age 50 would not have forfeited the unvested stock options under the retirement exception. But Air Products sought to objectively justify the award such that it was not unlawful. It was relying on two main reasons.

The first was inter-generational fairness and consistency. Air Products wanted consistent treatment between employees in its defined benefit scheme and its separate defined contribution (DC) scheme. Air Products said that members of the defined benefit scheme were already in a more favourable position than the DC members because, firstly the defined benefit pension was more generous and also a number of the defined benefit members could already take their pension at age 50 rather than 55 which was the case for the defined contribution members.

If employees who were in the defined benefit scheme were also able to retain their unvested LTIP awards when they left the company at age 50 (rather than 55 as with the rest of the workforce) this would be increasing their advantage over defined contribution members and the inter-generational unfairness already existing. To keep the retirement exception applicable to all employees assuming a customary retirement age of 55 promoted this intergenerational fairness.

The second reason that Air Products put forward was rewarding loyalty and experience. It said the purpose of the LTIP (and this particular provision) was to strike a balance between encouraging retention of employees up to a point but then providing an incentive to retire in order to create opportunities for younger employees. Air Products said the cut-off point was legitimately age 55 and that was the customary retirement age.

The Employment Tribunal rejected Mr Cockram’s claim. It accepted that the discriminatory effect was objectively justified taking into account those stated aims of the employer.

Mr Cockram then appealed to the Employment Appeal Tribunal and it said the Tribunal’s decision was wrong and sent it back to be reheard by a differently constituted Tribunal. It then went up to the Court of Appeal. The Court of Appeal agreed with the original Tribunal decision and dismissed Mr Cockram’s complaint. The Court looked at guidance in the earlier decision of Seldon v Clarkson Wright and Jakes in considering whether social policy objectives existed when the employer was looking to objectively justify its direct discrimination.

The Court of Appeal accepted that those ‘good leaver’ provisions could be objectively justified. It accepted that the employer’s legitimate aims of achieving inter-generational fairness and consistency were legitimate aims. Inter-generational fairness is a broad objective, it can be framed in lots of different ways depending on the circumstances. The Court of Appeal accepted that limiting advantage enjoyed by one age group over another is a legitimate social policy aspect of inter-generational fairness.

The consistency point was important because the Court of Appeal also agreed that although Mr Cockram personally had a protected pension age of 50, which meant he could take pension scheme benefits at that time, most members of the scheme of the defined contribution scheme could only take their pension from age 55. It was fine for the employer to take a consistent approach to the LTIPs’ customary retirement age.

The Court of Appeal also accepted that the submission around rewarding experience and loyalty was also appropriate and it wasn’t disproportionate in its application here. The Employment Appeal Tribunal had been wrong to overturn the Tribunal’s original decision.

Although the decision in Cockram was looking at the very specific terms of one employer’s share scheme, the Court’s guidance was really helpful to reassure employers that well thought out rationale of the practices can be a solid defence to an allegation of age discrimination.

Cockram is a reminder of the potentially legitimate aims when an employer is faced with a claim of age discrimination and many of those aims such as creating a balanced workforce, promoting recruitment of younger workers can be summarised as inter-generational fairness. On the other hand, cost saving alone is not a legitimate aim. If they do have a legitimate aim, an employer will need to show the Court that their actions are proportionate.

Article sourced from Gowling WLG – All about Age: Discrimination and Benefits 

Updated: 07/03/2020


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