Employment law articles

Budget Summary 2010 | How it will affect your business
24 June 2010

Blacklists banned | Data Protection Act 1998
2 June 2010

Hair length and dress codes
1 June 2010

Workplace blues | Fit note regime
28 May 2010

Full statutory holiday entitlement not employers responsibility
12 April 2010

Compromise Agreements | Claims of Misrepresentation
11 April 2010

Age Discrimination | Seldon v CWJ Court of Appeal Hearing

10 July 2009



Jo Davis, partner and head of employment law at B P Collins, outlines the background to this groundbreaking age discrimination case and gives her expert opinion on the potential outcomes of next weeks Court of Appeal hearing and the impact these could have.

The Age Regulations outlaw age discrimination in recruitment, promotion and other employment terms and apply to partners as well employees. They are unique in that they allow direct discrimination if the employer can show that the discrimination was a proportionate means of achieving a legitimate aim. In other areas, such as sex, race or disability discrimination, if you discriminate directly, there is no defence.

While the Age Regulations provide that retiring employees of 65 or above will not be discriminatory (provided the employer follows a specific procedure), there is no such exception for partners. Therefore, any provision in a partnership agreement that requires partners to retire will be discriminatory unless it can be objectively justified.

I spearheaded a claim on behalf of Leslie Seldon, the former senior partner at Kent-based law firm, Clarkson Wright and Jakes (CWJ), who claimed he was discriminated against when he was forced to retire at the age of 65. CWJ's Partnership Deed provided for retirement at the end of the calendar year in which partners turned 65. Mr Seldon indicated that he did not want to retire but CWJ refused his requests to stay on and Mr Seldon duly retired on 31 December 2006. As the Age Discrimination Regulations had come into force in the October of that year, he brought proceedings in the Employment Tribunal.

At the initial hearing, the Employment Tribunal found CWJ had victimised Mr Seldon by withdrawing a £30,000 golden handshake when he notified them of his intention to sue the firm. However, they said that the firm had been justified in forcing his retirement in order to achieve three "legitimate aims" for the business. These were, in essence, giving younger associates an opportunity of partnership after a reasonable period, allowing long-term workplace planning and maintaining a congenial working atmosphere by avoiding confronting partners about under-performance near to their retirement. The tribunal found that it mattered neither whether those aims had been fulfilled nor if they had been in the mind of the partnership at the time.

Mr Seldon appealed to the Employment Appeal Tribunal ("EAT") and the case was heard by the Honourable Mr Justice Elias, then President of the EAT, in the same month as the Heyday challenge in the European Court of Justice (ECJ) to the UK government’s retirement age of 65 for employees.

Elias J (in his last judicial act as President before his elevation to the Court of Appeal) got his decision out first. He upheld the Tribunal's findings in all but one respect. He found that the decision had been based on an assumption that the performance of some partners was likely to tail off at around 65 and there was no evidential basis for that assumption.

Mr Seldon appealed the decision to the Court of Appeal and his appeal comes on to be heard on Monday and Tuesday next week.

In the meantime, however, the ECJ decision in Heyday has been handed down and that has broadened the grounds on which Mr Seldon appeals.

In examining whether the retirement age of 65 for employees was lawful, the ECJ stated that aims which may be considered "legitimate" so as to justify direct discrimination on the grounds of age are social policy objectives, such as those relating to employment policy, the labour market or vocational training. It continued "By their public interest nature, those legitimate aims are distinguishable from purely individual reasons particular to the employer's situation, such as cost reduction or improving competitiveness, although it cannot be ruled out that the national rule may recognise, in the pursuit of those legitimate aims, a certain degree of flexibility for employers."

However, the Age Discrimination Regulations aren't drafted so as to be restricted to social policy objectives. Indeed, they are not distinguished from the justification defence adopted in all forms of indirect discrimination, where justification is simply for "legitimate aims".

So are the Regulations defective? Certainly, Mr Seldon will claim they are next week, supported by the Equality and Human Rights Commission and Robin Allen QC, who represented Age Concern in its Heyday challenge. He will argue that an employer cannot justify direct age discrimination for its own ends but only if that aim falls within the definition of a social policy objective and, even then, only if it can establish "to a high burden of proof the legitimacy of the aim pursued" (another ECJ nugget).

If he is right, he should emerge victorious. CWJ's aims were personal to their partnership and it would surely be a stretch too far to say that a desire of the partnership to plan long-term or maintain partnership congeniality constitutes a "social policy objective". If it did, surely Parliament would have included partnerships in the retirement age exemption it included for employees.

But there is a wider question in issue.

Have Parliament failed properly to enact the European Directive into UK law? There is obviously sufficient concern in Governmental circles that the newly named Department for Business, Innovation and Skills (formerly the Department for Business, Enterprise and Regulatory Reform ("BERR")) are intervening, represented by Dinah Rose QC, who represents the Government in the Heyday Challenge, which is to be heard in the High Court immediately after the Court of Appeal hear Seldon.

It's going to be an interesting week. If the Court of Appeal finds that the Age Discrimination Regulations are to be interpreted as providing latitude for employers to discriminate for legitimate social policy objectives (in line with the ECJ decision in Heyday), how is an employer to prove that its aim constitutes a "social policy objective" of the Member State? Heyday expressly provided that Member States do not need to list such objectives but, without doing so, this would seem to create immense uncertainty for employers.

It is likely that firms such as CWJ will point to the Notes on the Regulations produced in March 2006 as evidencing Parliament's social policy objectives and, notably, workforce planning specifically appears in relation to the employee default retirement age. However, even assuming that the UK Government manages to convince the High Court that this measure is a proportionate means of achieving a legitimate social policy objective (a high test, as the ECJ confirmed), what guidance does that give for other measures? While an individual employer could arguably show that workforce planning is a UK social policy objective, whether it can adopt its own measure to achieve that aim will still be questionable.

So what does this mean for UK businesses? In the absence of any social policy objectives having been legislated for by Parliament, the question of what aims might justify direct discrimination is completely in the air. While the guidance published by the DTI back in 2006 might give some insight, none of those aims have been tested to see whether they will satisfy the "high standard of proof" required by the ECJ.

If the Government fail to clear this hurdle when the Heyday decision is heard by the High Court later in the week, the results could be dramatic. The Advocate General has just handed down his opinion in a German case that, if a domestic law does not correctly enact European law, the national court can refuse to apply the local law, even if the case involves private individuals. So if the Government lose Heyday, employees who have been forced to retire at 65 could proceed with their claims for age discrimination (they are currently stayed) and it is hard to see what defence an employer could mount.

For further information on the Age Discrimination regulations and the Court of Appeal case, please contact Jo Davis in the employment law team on 01753 279029 or email jo.davis@bpcollins.co.uk.