Retirement Discrimination in the Workplace

Retirement Discrimination

Retirement Discrimination in Employment

Since the repeal of the default retirement age (DRA) on 6 April 2011, any employer operating a compulsory retirement age is at risk of unlawfully discriminating against its employees on grounds of age. Such practices are considered prima facie direct age discrimination under the Equality Act 2010 (EqA 2010). For a fixed retirement age to be lawful, it must be objectively justified as a proportionate means of achieving a legitimate aim.

Justifying Compulsory Retirement. To justify a fixed retirement age, an employer must demonstrate that:.

• It is intended to meet a legitimate aim.

• Having that particular retirement age meets that aim.

• It is proportionate to use that retirement age as a means of meeting that aim.

Legitimate Aims

For direct age discrimination, including compulsory retirement, the legitimate aim must be to pursue social policy objectives of a public interest nature, distinguishable from purely individual reasons such as cost reduction or improving competitiveness.

Examples of legitimate aims that courts and tribunals have accepted in the context of compulsory retirement include:

• Promoting inter-generational fairness involves sharing professional employment opportunities fairly between generations and promoting access to employment for younger people.

• Workforce planning and facilitating succession planning by maintaining predictable retirement dates.

• Dignity, such as avoiding the need to manage older under-performing staff out of the business by formal performance management procedures.

• Ensuring a mix of generations of staff to promote the exchange of experience and new ideas.

• Ensuring a high quality of service or operational capacity in certain professions (e.g., police, fire services).

• Standardising retirement ages across the public sector.

It is essential that these social policy aims are actually relevant to the employer's individual circumstances. Cost saving alone is not a legitimate policy aim for direct age discrimination.

Proportionality

An age-discriminatory measure, like compulsory retirement, must be an "appropriate and necessary" means of achieving the legitimate aim, meaning it should go no further than necessary. This involves a balancing exercise between the importance of the legitimate aim and the extent of the discriminatory effect.

Factors considered in assessing proportionality include:

• Whether the chosen retirement age actually achieves the legitimate aim identified.

• Whether there are less discriminatory alternatives available (e.g., fitness or competence tests instead of age-based retirement).

• Why the particular retirement age chosen is appropriate and necessary.

• Whether the employer applies a retirement age consistently.

Case Examples on Proportionality

In Seldon v Clarkson Wright and Jakes, the Supreme Court found that a law firm's compulsory retirement of a partner at 65 could be justified by aims such as staff retention, workforce planning, and dignity, which were deemed social policy objectives. On remission, a tribunal found 65 to be a proportionate means of achieving these aims.

Conversely, in Martin and others v Professional Game Match Officials Ltd, a retirement age of 48 for assistant football referees was found to be disproportionate, partly because other countries had higher cut-off points.

Commission v Hungary highlighted that a sudden, significant reduction in the compulsory retirement age (from 70 to 62 within one year) was disproportionate, as it did not allow adequate time for financial provision and its effect on workforce turnover would be short-term.

The EAT in Pitcher v University of Oxford upheld conflicting tribunal decisions on the justification of Oxford University's employer-justified retirement age (EJRA), demonstrating the critical importance of the employer's evidence on the EJRA's impact on legitimate aims like vacancy creation and the detriment suffered by those affected.

Occupational Requirements (OR) Defence

Beyond objective justification, an employer might rely on the Occupational Requirement (OR) defence. This applies in limited circumstances where, due to the nature or context of the work, being of a particular age or age group is an OR, and the application of this requirement is a proportionate means of achieving a legitimate aim. While similar to objective justification, ORs specifically relate to the inherent demands of the job itself. For example, maximum recruitment ages for physically demanding roles like firefighters have been justified as ORs in European case law.

Relevance of Pension Availability

The availability of a reasonable pension to an employee can be a significant factor when justifying compulsory retirement rules, as it mitigates the prejudice suffered by older workers upon retirement.

Workplace Procedures and Discussions

Employers should be cautious when discussing retirement plans with older workers. While general discussions about future aspirations are good practice, repeatedly suggesting retirement, especially to an employee showing signs of impairment, can constitute direct age discrimination and harassment. It is crucial to apply usual policies consistently regarding performance or ill-health, irrespective of an employee's age, and to avoid assumptions based on age (e.g., assuming an older employee is "due to retire soon anyway").

Voluntary Redundancy and Retirement

When offering voluntary redundancy or retirement, employers must be careful not to discriminate on the grounds of age. For instance, offering voluntary redundancy only to younger employees while denying it to older ones (e.g., due to higher pension costs) can be direct age discrimination unless objectively justified.

Dismissing Fairly on Retirement

Suppose an employer has a fixed retirement age that is objectively justified. In that case, the dismissal of an employee on reaching that age must still be fair for one of the five potentially fair statutory reasons (usually "some other substantial reason" (SOSR)) and follow a fair procedure. Giving adequate notice and checking awareness of the policy are considered good practices.

Pensions and Benefits

Specific exceptions exist in the EqA 2010 that allow employers to cease providing certain insurance benefits (such as life assurance or health insurance) to employees once they reach the greater of age 65 or state pension age. Furthermore, occupational pension schemes have implied non-discrimination rules, though specific exemptions apply to various scheme rules and employer contributions to group personal pension schemes. Share schemes often include "good leaver" provisions for retirement, but if these are restricted to employees retiring at or after a specified age, they may increase the risk of age discrimination claims.

Impact of EU Law Post-Brexit

While the Equal Treatment Framework Directive no longer forms part of UK law, the EqA 2010 was enacted partly to implement it and must still be interpreted in accordance with assimilated EU case law until a relevant senior court departs from it. This means that pre-Brexit decisions of the European Court of Justice (ECJ) on age discrimination remain relevant for understanding the scope of legitimate aims and proportionality in justification.