Looking beyond compulsory retirement

New frontiers for age equality

In the early years of age equality legislation the battle lines were largely drawn around direct discrimination. While retirement ages will continue to be under judicial microscope for a while yet, we have already detected a shift of focus towards indirect discrimination.

The move towards optional retirement

It is not far short of ten years ago that age equality legislation was first introduced in Britain. However until April 2011 there was a major exception to the non-discrimination principle in the shape of the default retirement age, which allowed employers to impose compulsory retirement at the age of 65.

Nearly four years on from its abolition, for the most part employers have adapted to life without compulsory retirement, though there are some examples where compulsory retirement ages have been retained on the basis that they can be objectively justified.

In Britain, the case law on compulsory retirement has been dominated by the litigation involving Leslie Seldon, a solicitor who was made to retire from his partnership in a solicitors’ firm at the age of 65. At the time proceedings were begun in 2007 the default retirement age was in place, but it has never applied to retirement from partnerships.

No fewer than six court rulings have resulted, of which the most important was the decision of the Supreme Court in 2012. It was not until May 2014 that the proceedings finally ended with a second ruling in the Employment Appeal Tribunal, confirming that the employment tribunal had been correct to dismiss his claim.

Perhaps the length and complexity of this litigation has been enough to put employers off retaining a compulsory retirement age, despite the fact that the outcome went against the claimant at all stages. But there has also been a growing realisation that age is a poor proxy for performance and that with rare exceptions, retirement can be managed consensually, without the need for a rigid cut-off point.

A growing awareness of indirect age discrimination

On the same day that the Seldon ruling was published, the Supreme Court decided another age discrimination case. It involved Mr Homer, a retired police officer who had been working as a legal adviser for the Police National Database for ten years before his post was re-graded. He challenged the imposition of a requirement that he should have a law degree as a condition to progressing to the highest salary grade. This was introduced three years before he was due to reach the normal retirement age of 65, leaving him insufficient time to obtain a degree by that point. He therefore argued that had been subject to indirect age discrimination.

Indirect discrimination on grounds of age occurs where an apparently neutral policy, criterion or practice (PCP) puts people of a particular age group at a disadvantage. A defence is available if the PCP can be justified as a “proportionate means of achieving a legitimate aim”. Following EU case law, “proportionate” has been interpreted as meaning both appropriate and necessary with regard to the means chosen.

Mr Homer faced a considerable battle to establish that the imposition of the requirement to have a degree was even potentially indirect discrimination. In the end the Supreme Court overturned the Court of Appeal’s reasoning and confirmed that its imposition at this point in Mr Homer’s career put him at a particular disadvantage because of his age. It was no answer to say that the problem was not age but retirement related, because the two concepts were so closely bound up together: it was a function of his age that he had insufficient time to complete a degree before he was due to retire.

Late last year we had another significant indirect age discrimination decision, this time involving the recruitment of an academic at a university. In this case the policy challenged was the need to have a PhD before progressing to a permanent academic post. On the face of it, like the requirement to have a degree, this appears to be a neutral requirement, until it is appreciated that it is a qualification that a smaller proportion of older graduates possess. When the claim came before the Employment Appeal Tribunal it criticised the narrow way the employment tribunal had approached the claim, saying that persuasive evidence of age-related disadvantage, rather than definitive statistics, was all that was required to get such a claim off the ground.

In neither case was the final appeal court able to make a definitive decision on the employer’s justification defence. In the case of Homer, the employment tribunal ultimately decided that the employer’s defence was not made out, since it could have quite easily achieved its objectives by restricting the requirement to have a degree to new recruits. We are still waiting for the final decision in the university case.

Employers seeking to learn lessons from these cases should focus not so much on the final outcome but on the need to be alert to policies which, although they may at first sight appear to have little to do with age, may not be age neutral in practice. As Lady Hale pointed out when giving the Supreme Court’s judgement in Homer, in the relatively new field of age discrimination: “we all still have a lot of learning to do”.

Will flexible working be the next battleground?

To our knowledge there have as yet been no age discrimination cases involving requests for flexible working. However, now that the right to request has been extended to all employees, there is probably scope for older workers testing the limits of employers’ flexible working policies, in much the same way as women returning from maternity leave have done in the past.
One likely impact of the abolition of compulsory retirement is a growing cohort of older workers working fewer hours during the last years of their working life. Indeed nearly 40 per cent of workers over the age of 50 in a recent survey commissioned by the Department for Work and Pensions identified this as their preferred route to retirement. It may be not too much of a stretch to identify this as a particular need for older workers and therefore to make a case for group disadvantage if a request for flexible working arrangements is turned down.

As with all cases of potential indirect discrimination, the law stops short of outright prohibition. However it is likely to be a challenge for employers to identify which apparently age-neutral policies put older workers at a disadvantage, and then to assess whether the courts are likely uphold a justification defence. We predict more case law on this issue in the coming months.