A group of judges and firefighters who claimed they had been the victims of unlawful age discrimination recently won their Court of Appeal case against the government.
The case of Lord Chancellor v McCloud and others focused on the government's approach to wide-ranging reforms to their public sector pension arrangements in 2015. The controversy was the transitional protection, which meant that those members who were within 10 and 13.5 years of normal pension age were allowed to continue accrual in the final salary plan, rather than move to the new, less generous career average revalued earnings plan. Younger members were not protected and moved over on 1 April 2015.
Essentially, a judge's or firefighter's age made all the difference as to whether they were protected or not. The government accepted this but argued that it was not an unlawful practice.
Unlike other forms of direct discrimination, disadvantaging a person on the grounds of their age is objectively justifiable, and therefore lawful. However, the discriminatory act must be a proportionate means of achieving a legitimate aim. The government relied on this. It claimed the legitimate aim of the transitional protection was to protect members who were closest to normal pension age, on the grounds that they would have:
- The least time to rearrange their affairs before retirement
- A legitimate expectation that their pension entitlements would not change significantly when they were close to retirement
The court found in favour of the judges and firefighters because it said that a legitimate aim had to be:
- Demonstrated by the government, but those closest to retirement were the ones least affected by the changes and so least deserving of protection
- Supported by evidence, but no evidence was provided to support the argument that older members would be unable to rearrange their affairs
Objectively justifying direct age discrimination is a high hurdle for any employer and the costs if you get it wrong could be significant. If the decision is not appealed (successfully), the younger judges and firefighters will need to be put back into their final salary plan with effect from 1 April 2015, or some other way will need to be found to give them the pension value they would have enjoyed if they had been treated the same way as the older members.
Lessons for employers
While these were pensions cases, the principles can be applied to any age- discriminatory employment practice:
- Legitimate aims must be of a public interest nature, such as ‘intergenerational fairness’ and ‘dignity’; cost reduction or improving competitiveness won't make the grade
- The legitimate aim must be supported by detailed statistical evidence, not based on assumptions or generalisations. It must also show that the discriminatory treatment was an appropriate means of achieving that aim and necessary to that end
- If the legitimate aim is not made out, the disadvantaged person's benefits/terms have to be levelled up from the date the discrimination began; you cannot undo the discrimination by retrospectively putting the favoured person in a worse position
- A policy or practice which is discriminatory on grounds of age could also be discriminatory on the grounds of sex or race, because you might find that diversity has only been achieved in your business in recent years with the recruitment of younger employees
- Compliance with age discrimination legislation is an ongoing requirement. These cases should be a prompt to dust off any earlier age-discrimination review your business has carried out, to see whether the conclusions reached then, continue to hold true today
Tracy Walsh is a partner at Womble Bond Dickinson (UK) LLP