New Supreme Court Judgments in Discrimination Cases

30 APRIL 2012

On 25th April 2012, the Supreme Court gave judgment in two separate cases, heard together in January 2012, concerning direct age discrimination and indirect age discrimination respectively. 

Both cases concerned provisions under the Employment Equality (Age) Regulations 2006 (‘the Age Regulations’), brought into force in October 2006 and since repealed but substantially re-enacted under the Equality Act 2010. Both cases pre-date the repeal, in October 2011, of the default retirement age.

In Seldon v Clarkson Wright and Jakes (A Partnership) [2012] UKSC 16, the Supreme Court was concerned with the test involved in determining justification of direct discrimination on the ground of age. The Supreme Court dismissed a solicitor’s appeal against the Court of Appeal’s decision that a mandatory retirement provision contained within a partnership agreement did not amount to direct discrimination under the Age Regulations.

In Homer v Chief Constable of West Yorkshire Police [2012] UKSC 15, the Supreme Court held that a requirement to hold a law degree for career progression comparatively disadvantaged a person approaching compulsory retirement age and was indirectly discriminatory on grounds of age. The question of whether such indirect discrimination can be justified was remitted to the ET for redetermination.

Seldon v Clarkson Wright and Jakes (A Partnership) [2012] UKSC 16

The Appellant joined the Respondent law firm in 1971, was made an equity partner in 1972 and senior partner in 1989. In 2005, the partners adopted a partnership deed which provided (as had earlier deeds) that, subject to agreement to the contrary, partners had to retire at the end of the year in which they reached the age of 65. The Appellant turned 65 in January 2006 but decided that he wanted to continue working for several more years. His proposal to continue working was rejected by the other partners (put on the basis of there being no sufficient business need). The Appellant was initially offered an ex gratia payment of £30,000 but when the Appellant told the partners that he was considering his rights under the Age Regulations they withdrew their offer of an ex gratia payment. The Appellant’s partnership in the firm ceased on 31 December 2006 and he issued proceedings in March 2007 alleging—

(i) his forced retirement was an act of direct age discrimination under the Age Regulations; and

(ii) the withdrawal of the offer of an ex gratia payment was an act of victimisation. There was no issue in the case that the Appellant had been treated less favourably on account of his age: the central issue in the case was whether that treatment could be justified.

The ET found the Respondent’s retirement policy pursued legitimate aims and that the mandatory retirement age of 65 was a proportionate means of achieving the legitimate aims and accordingly rejected the discrimination claim but upheld the victimisation claim. The EAT held that the ET had failed to consider whether the aims could have been met by a retirement age other than 65 and remitted the case on that point alone.

The Court of Appeal dismissed the Appellant’s appeal against the EAT’s decision and he appealed in turn to the Supreme Court.

The issues before the Supreme Court were:

(i) whether the aims of the retirement clause were legitimate aims for the purpose of justifying direct age discrimination;

(ii) whether C had to justify the application of the retirement clause to the individual case as well as justifying it generally; and

(iii) whether the tribunal had been right to conclude that relying on the clause was a proportionate means of achieving any or all of the identified aims.

Lady Hale gave the lead judgment. The Supreme Court unanimously dismissed the appeal and remitted the case to the ET on the outstanding issue (justification). In dismissing the appeal, the Supreme Court held—

(1) The ET did not have the benefit of the later decisions of the ECJ and the UK High Court. It was clear from those decisions that the approach to justifying direct age discrimination was not identical to the approach to justifying indirect discrimination and that regulation 3 of the Age Regulations had to be read accordingly.[1] The Court recognised that the Age Regulations gave employers and partnerships flexibility in choosing which objectives to pursue, provided always:

  • those objectives could count as legitimate objectives of a public interest nature within the meaning of Directive 2000/78;
  • were consistent with the social policy aims of the state; and
  • the means used were proportionate to the aim and reasonably necessary to achieve it.[2]

ECJ jurisprudence identified two different kinds of legitimate objective: inter-generational fairness and dignity. Even if a particular aim is capable of being a legitimate aim, it is necessary for the court or tribunal to enquire whether that aim was in fact being pursued (although the Supreme Court recognised that the aim need not have been articulated or even realised at the time when the measure was first adopted and it can be an ex post facto rationalisation.). It was necessary to ask whether an aim was legitimate in the particular circumstances of the employment concerned. The means chosen also had to be both appropriate and necessary to achieve the end.

The Court held that, in the Appellant’s case, the aims identified were legitimate. Staff retention and workforce planning were both directly related to the legitimate social policy aim of sharing out professional employment opportunities fairly between generations. Limiting the need to expel partners by way of performance management was directly related to the dignity aims. It was also clear that the aims could be related to the particular circumstances of the type of business concerned.[3]

(2) As regards justification of what would be direct discrimination under article 6(1) of the Directive, the Court remarked that aims of the measure concerned had to be social policy objectives, such as those related to employment policy, the labour market or vocational training. Aims of a public interest nature were distinguishable from purely individual reasons particular to the employer's situation.[4] The Court observed that where a general rule was justified, the existence of that rule would usually justify the treatment which resulted from it. In the particular context of inter-generational fairness, it had to be relevant that at an earlier stage in his life, a partner or employee might have benefited from a rule which obliged his seniors to retire at a particular age. Lady Hale remarked: ‘There is therefore a distinction between justifying the application of the rule to a particular individual, which in many cases would negate the purpose of having a rule, and justifying the rule in the particular circumstances of the business. All businesses will now have to give careful consideration to what, if any, mandatory retirement rules can be justified.’[5]

(3) The case had to be remitted to the ET because it could not be ruled out that the ET would have regarded the choice of a mandatory retirement age of 65 as a proportionate means of achieving the first two aims. (The ET would have to take account of the fact that the mandatory retirement clause had been applied to the Appellant at a time when the designated retirement age for employees was still in force (i.e. prior to October 2011).)

Following the removal of the default retirement age in October 2011 and with very little practical guidance on the extent of lawful justification in the context of retirement provisions and direct age discrimination, employers and employment lawyers had anticipated guidance in this area from the Supreme Court. As regards justification, the Supreme Court’s judgment clarifies that where the aim pursued is one of ‘inter-generational fairness’ or ‘retirement with dignity’; other grounds will not be excluded provided they are in the public interest on employment policy, labour market or vocational grounds. Such aims must be legitimate having regard to the particular circumstances of the business (cf. invoked as a general defence). Further, the means chosen to achieve the aims must be proportionate. The judgment makes it clear that an employer will have to prove his chosen mandatory retirement age appropriate and that other less discriminatory measures would not suffice. It remains to be seen if in the application of Seldon, concerning as it did a mandatory retirement term in a partnership deed, any point of distinction will emerge as between partnership arrangements and the more conventional relationships between employer and employee. Although the judgment of the Supreme Court clarifies the type of aims that are legitimate for an employer to pursue under a mandatory retirement policy, one immediately obvious issue that remains is that employment lawyers are still no clearer post-Seldon as to whether a cut-off age of 65 is appropriate as the Supreme Court remitted that issue to the ET.

Homer v Chief Constable of West Yorkshire Police [2012] UKSC 15

The Appellant was a retired police officer who began working for the Police National Legal Database as a legal advisor in 1995 when he was 51. At the time of his appointment, it was not a requirement for the post-holder to hold a law degree provided he had exceptional experience or skills in criminal law along with a lesser qualification in law. It was into the latter category which the Appellant had fallen upon being appointed to the job. In 2005, the Police National Legal Database introduced a new grading structure. There were three promotion thresholds above the starting grade; the case before the Supreme Court concerned the third and final grade threshold, as it required the post-holder to have a law degree. In 2006, when the Appellant was graded under the new structure he was 62 (due to retire at 65). In order to reach the third and highest threshold under the new structure he would have been required to study for a law degree part-time alongside his work, which would have taken him four years to complete. However, under the old grading structure, with his previous skills and experience the Appellant was effectively at the top grade. The Appellant would have been unable to reach or benefit from being at the third threshold before leaving the employment.

At first instance, the ET found that the appropriate age group was employees aged between 60 and 65 as these persons would have been unable to obtain any real benefit from obtaining a law degree before retiring. The ET found the Appellant had been indirectly discriminated against on the ground of age and that this was not objectively justifiable on the facts. The EAT held (i) there had been no indirect discrimination, but (ii) if there had been, it would not have been objectively justified. The Court of Appeal dismissed the Appellant’s appeal against the first finding, and dismissed the Respondent’s cross-appeal against the second finding and both findings were then appealed to the Supreme Court.

Lady Hale gave the lead judgment. The Supreme Court unanimously allowed the appeal, finding that the Appellant was indirectly discriminated against by the Respondent. The case was remitted to the ET to reconsider the issue of justification. The Supreme Court held in allowing the appeal and remitting the cross-appeal to the ET—

(1) The EAT and the Court of Appeal accepted the argument that the Appellant’s position was comparable with any other employee nearing the end of their employment for whatever reason and what put him at a disadvantage was not his age but his impending retirement (i.e. it was this that ‘put’ him at a particular disadvantage from obtaining a degree and reaching the third promotion threshold). The Supreme Court rejected that argument, with Lady Hale observing its flaw is to ignore the fact that persons in the position of the Appellant were disadvantaged because of a reason (in this case, retirement) that directly related to their age. Persons similarly disadvantaged for reasons not related to their age would not fall within the scope of the Age Regulations and were not the intended recipients of its protection.[6] If the Respondent’s argument were translated into other contexts it would have alarming consequences for the law of discrimination generally. The Age Regulations were intended to make it easier to establish indirect discrimination; all that was required was for a claimant to demonstrate he a particular disadvantage when compared with other people who did not share the characteristic in question. In any event, it could not be right to equate leaving work because of impending retirement with other reasons for doing so. They were materially different. Thus, a requirement which worked to the comparative disadvantage of a person approaching compulsory retirement age was indirectly discriminatory on grounds of age. In the Appellant’s case, the reason for the disadvantage was that people in his age group did not have time to acquire a law degree; the reason they did not have sufficient time was that they were soon to reach the age of retirement.[7]

(2) As regards justification of indirect discrimination, the Court observed that the law was settled. A provision, criterion or practice was only justified if the employer could show that it was a proportionate means of achieving a legitimate aim. The range of aims which could justify indirect discrimination on any ground was wider than for direct discrimination. It is not limited to the social policy or other objectives derived from article 6(1), 4(1) and 2(5) of the Directive, but can encompass a real need on the part of the employer’s business.[8] (It was not disputed that the Police National Legal Database requirement of a law degree to facilitate recruitment and retention of appropriate staff was a legitimate aim.) When considering proportionality, it was necessary to distinguish the aims of recruitment and retention. In the Appellant’s case, it was necessary to distinguish between the justification of the criteria for recruitment and for progress to further thresholds. The ET had erred in regarding the terms ‘appropriate’, ‘necessary’ and ‘proportionate’ as ‘equally interchangeable’. The Court held that in order for a measure to be proportionate, it had to be both an appropriate means of achieving the legitimate aim and reasonably necessary in order to do so. It therefore had to be asked whether requiring existing employees to have a law degree before they could achieve the higher threshold was appropriate to the aims of recruiting and retaining new staff or retaining existing staff within the organisation. It also had to be asked whether it was reasonably necessary in order to achieve the legitimate aims of the scheme to deny those benefits to people in the Appellant’s position. The ET had erred in not asking that question. As the ET had not correctly approached the question of justification in a suitably structured way or asked itself the correct questions, the issue would be remitted to the ET for reconsideration.[9]

Justin Amos

[1] In making this finding the Supreme Court applied the following reported decisions: R. (on the application of Age UK) v Secretary of State for Business, Innovation and Skills [2009] EWHC 2336 (Admin), [2010] 1 C.M.L.R. 21 and R. (on the application of Incorporated Trustees of the National Council on Ageing (Age Concern England)) v Secretary of State for Business, Enterprise and Regulatory Reform (C-388/07) [2009] All E.R. (EC) 619.

[2] See [2012] per Lady Hale at [50] to [52]

[3] See [2012] UKSC 16 per Lady Hale at [57], [59] to [62], [68]

[4] The Supreme Court applied Age UK and Fuchs v Land Hessen (C-159/10) [2011] 3 C.M.L.R. 47;  see [2012] UKSC per Lady Hale at [50].

[5] [2012] UKSC 16 per Lady Hale at [66].

[6] [2012] UKSC 15 at [12], [13]

[7] [2012] UKSC 15 at [13] to [18]

[8] [2012] UKSC 15 per Lady Hale at [19], applying Bilka-Kaufhaus GmbH v Weber von Hartz, Case 170/84, [1987] ICR 110.

[9] [2012] UKSC 15,