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Age discrimination: objective justification
The Employment Equality (Age) Regulations 2006 (the Age Regulations) allow employers to defend a claim of either direct or indirect age discrimination by objectively justifying the acts complained of. Recently, Unison launched a judicial review in the High Court to challenge the government's decision to alter the Local Government Pension Scheme arrangements. The Scheme allowed employees to retire early on full pensions provided that their age and years of service added up to 85 (the 85 year rule).
Facts
The government decided to remove the 85 year rule from the Scheme on the grounds it was unlawful and in contravention of the Framework Directive for Equal Treatment (the Directive) from which the Age Regulations are derived.
Unison argued that the Directive did not apply to the Scheme's 85 year rule either because it was not age discrimination, or, alternatively, if it was age discrimination it was justifiable (the Directive permits age discrimination which is justified).
Court's decision
The Court considered that the 85 year rule was discriminatory because age was the significant criterion resulting in differentiation of pension treatment.
When deciding whether or not this treatment was objectively justifiable, the Court considered Unison's argument that the 85 year rule rewards loyalty and encouraged people to join the local government workforce at an early age. Unison also argued that it encouraged the retention of workers, who value having a target to work for, at which they are assured an unreduced pension.
This argument was rejected on the grounds that, in fact, the 85 year rule treated employees who remained in local government service, and those who start in that employment but then leave, indifferently. It could not, therefore, be a system that rewarded loyalty. Those who are loyal and remain do benefit, but so do those who leave local government employment after what may have been a short period of service. Although the 85 year rule may encourage people to join local government at a relatively young age, the advantage of this is marginal if there is not also an incentive to remain. In the Court's view the 85 year rule did not provide such an incentive.
Because the High Court reached its decision on a separate point, it was not strictly necessary for it to examine whether the issue of the 85 year rule was age discriminatory. The Court's thoughts must therefore be regarded as obiter and have no binding precedent value. They nevertheless provide an indication of current judicial thinking and may provide a steer to tribunals considering whether incentive arrangements are objectively justifiable on the grounds that they encourage employee loyalty. It also illustrates that it may be very difficult to convince a tribunal that a benefits programme does, in fact, achieve such a desired effect, particularly if no empirical analysis has been carried out.
Unison v The First Secretary of State [2006] EWHC 2373 (Admin)