As promised in last month’s edition, Alessanda Gettins has produced a detailed case report on the recent decision in the Supreme Court in the case of Seldon v Clarkson Wright and Jakes which looked further into the area of direct age discrimination and on what grounds it can be objectively justified.
Background
- Employment Equality (Age) Regulations 2006 (the “Age Regs”):
The lengthy court history of this case means that it is being looked at in the context of ‘old’ legislation (i.e. the Age Regs). However as the salient provisions have now been transferred to the Equality Act 2010 (EA 2010), which repealed and replaced the majority of the Regulations on 1 October 2010, the decision in this case remains applicable in current law.
The Age Regs provided that an act would not amount to direct (or indirect) age discrimination if it was "a proportionate means of achieving a legitimate aim". This wording also appears in the EA 2010
- The Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 (the “Retirement Regs”):
The Retirement Regs came into force on 6 April 2011 and removed the default retirement age. As explained in the Government Response to the consultation on abolition of the default retirement age, the changes "do not mean that individuals can no longer retire at 65 - simply that the timing of that retirement becomes a matter of choice rather than compulsion". Therefore, in brief, compulsory retirement of any employee now amounts to direct age discrimination unless it can be objectively justified.
Facts
By way of brief recap the Claimant in this case, Mr Seldon, was an equity partner in the solicitors firm of Clarkson Wright and Jakes. Under the firm’s partnership agreement, there was a provision which provided for retirement at 65. As a result of this Mr Seldon was compulsory retired on 31 December 2007, the end of the year in which he turned 65.
Mr Seldon was against retiring and wished to remain working in Clarkson Wright and Jakes. As a result of this he consequently lodged a claim in the employment tribunal (ET) for direct discrimination on the grounds of age.
Judgement
Although the development of the various judgements in this case can be reviewed in more detail by reference to our earlier report, we have also provided a recap as below:
ET decision
The ET dismissed Mr Seldon’s claims and held that the compulsory retirement was a proportionate means of achieving legitimate aims and therefore was objectively justified. The three “legitimate aims” for the retirement age which were run by Clarkson Wright and Jakes and endorsed by the ET were;
- Ensuring associates were given the opportunity of partnership after a reasonable period;
- Facilitating the planning of the partnership and workforce across individual departments by having a realistic long term expectation as to when vacancies will arise; and
- Limiting the need to expel partners by way of performance management, thus contributing to the congenial and supportive culture in the firm
The first two claims together made up the “dead man’s shoes” argument and the third the “collegiality” argument.
Mr Seldon appealed to the Employment Appeal Tribunal (EAT).
EAT decision
The EAT upheld one aspect of the appeal. Whilst they held that the ET was entitled to find that compulsory retirement at a particular age achieved certain legitimate objectives (a decision reached through their agreement with the “dead man’s shoes” argument) they held there was no evidence to show that there was no basis for an assumption that performance tailed off at 65 and that, in fact, statistics showed that it did not really start until 70 (thereby disagreeing that a compulsory retirement age of 65 was a proportionate means of achieving the “congeniality” argument).
As a result the case was remitted to the ET. However, Mr Seldon appealed the EAT’s decision and the case proceeded to the Court of Appeal (CA).
CA decision
Mr Seldon’s appeal was unsuccessful at the CA, which upheld the EAT’s decision.
In bringing his appeal Mr Seldon sought to argue that the aims put forward by Clarkson Wright and Jakes, of encouraging associate retention and workforce planning, had been put forward as they were relevant to its own situation and that they had not established that those aims were of a social policy/public interest nature. On that basis he argued that the tribunal had therefore erred in holding that they were legitimate. In proceeding with this argument, Mr Seldon made reference to the decisions of the European Court of Justice (ECJ) and the High Court in the challenge to the Age Regulations brought by the ‘Heyday’ case (The Incorporated Trustees of the National Council on Ageing (Age Concern England) v Secretary of State for Business, Enterprise and Regulatory Reform). This decision held that that aims must be of a "social policy/public interest nature".
In reaching it’s decision on Mr Seldon’s appeal the CA noted the "important distinction" between what the ECJ decided about the legality of UK regulations and the duty of a private employer; they held that whilst UK legislation had to be justified by reference primarily to social and employment policy choices, this did not mean that "a particular employer must only have 'a social or employment policy' aim".
Mr Seldon made a further appeal to the Supreme Court (SC)
SC decision
The appeal was heard by the SC on 17 January and, as per our alert last month, was finally published on 25 April. In short, the SC rejected Mr Seldon’s appeal and held that Clarkson Wright and Jakes had legitimate aims for insisting on his compulsory retirement at the age of 65.
The key reasons given for it’s decision are as follows:
Legitimate aims
The SC followed the ruling of the ECJ and therefore clarified that to justify direct age discrimination, the legitimate aims identified must be "social policy objectives" and not simply reasons particular to an individual employer's or firm's situation. However the SC noted that there were no specific social policy aims in the direct age discrimination provisions of the Age Regs or the EA 2010 and therefore held that this allowed employers (and partnerships) the “flexibility to choose which objectives to pursue", albeit these must still be objectives of a public interest nature and be consistent with the UK’s social policy aims.
The SC went on to identify two different kinds of legitimate, social policy objectives that have been identified by the ECJ:
i.) Inter-generational fairness: an example of this being facilitating access to employment by young people and enabling older people to remain in the workforce.
ii.) Dignity; which includes limiting the need to dismiss older workers on the ground of underperformance, thus preserving their dignity and avoiding humiliation and avoiding costly and divisive disputes.
In terms of this case, the SC held that the aims put forward by Clarkson Wright and Jakes were legitimate and that, in addition, it was incorrect to define them as just being individual aims of the firm. Their aims for staff retention and workforce planning were held to be linked in with the social policy objective of sharing professional employment opportunities fairly between the generations. In addition, limiting the need to expel partners by way of performance management also relates to the dignity objective accepted by the ECJ, as above.
Whether retirement age of 65 was proportionate
Upon finding that Clarkson Wright and Jakes had identified legitimate aims, the second issue to be considered is whether compulsory retirement at 65 was "appropriate and necessary".
In doing this the SC had regard to the CA’s decision and held that the case should return back to the ET. This was primarily because the choice of 65 as the compulsory retirement age was not held, by the CA, to be an appropriate means of achieving the third legitimate aim identified (“congeniality”). Therefore, it is now necessary for the tribunal to consider whether the first two aims were sufficient for justification purposes. The SC went further and said that they "would not rule out" the tribunal's also considering whether the choice of a retirement age of 65 was a proportionate means of achieving these first two aims. In reaching this decision, Lady Hale of the SC explained that "there is a difference between justifying a retirement age and justifying this retirement age"; as the tribunal "did not unpick the question of the age chosen and discuss it in relation to each of the objectives", it "would be unduly constraining to deny them the opportunity of doing so now". Therefore the tribunal will look at whether the particular age of 65 was proportionate or whether another age would be less-discriminatory, i.e. 70.
What does this mean for me?
It is important that employers remain aware that there are two significant strands to any decision regarding compulsory redundancy; firstly, they must be able to demonstrate a legitimate aim relating to that compulsory retirement; and secondly, they must be able to show that the means chosen to pursue that aim are proportionate. It is that second issue that we are yet to receive judgement on. Commentators have indicated that the SC’s earlier decision in the case of Homer v Chief Constable of West Yorkshire Police is likely to be applied by the tribunal; it was held in this case that, when assessing whether a measure is proportionate, a court must consider whether there are other, less discriminatory, measures which could achieve the same aim.
To assist in the first part of the process, in one section of the judgement, Lady Hale, set out a number of legitimate aims which she felt had been recognised in case law involving age discrimination claims:
- promoting access to employment for younger people;
- efficient planning of the departure and recruitment of staff;
- sharing employment opportunities fairly between the generations;
- ensuring a mix of generations amongst staff so as to promote the exchange of experience and new ideas;
- rewarding experience;
- cushioning the blow for long serving employees who might find it hard to find new employment if dismissed;
- facilitating the participation of older workers in the workforce;
- avoiding the need to dismiss employees on the ground that they are no longer capable of doing the job, which may be humiliating; and
- avoiding disputes about an employee's fitness for work over a certain age.
The judgement provided the following warning; "all businesses will now have to give careful consideration to what, if any, mandatory retirement rules can be justified in their particular business". This is a helpful summary of the position going forward; whilst this case has shown that compulsory retirement is still possible following the abolition of the default retirement age, it has simultaneously made it clear that the grounds on which this can be done are tightly controlled and that the requirement to justify any discrimination remains a relatively stringent hurdle to overcome.
On that basis this judgement should be read with some degree of caution, not least because this particular case has not come to an end.