Appeal court rules that the statutory upper age limits are lawful

[This article remains here for historical interest - it was put up on our site in 2002 and states the law at that time. However, in 2006 this case got to the Supreme Court. The original article concerned the law prior to 2002 that stated that the right to be unfairly dismissed does not apply if, on or before the ‘effective date of termination’ of employment, the employee has reached the age of 65. This was found in section 109(1)(b), of the Employment Rights Act 1996. This law predates age discrimination. That law also provided that employees over the age of 65 had not right to a statutory redundancy payment.

As we said, this was the law at that time. Looking back, from 2020 when we looked again at this article it appeals awful that the UK could have had such age discriminatory provisions.

Back to the law as it was then: as both redundancy pay and unfair dismissal compensation came within the equal pay laws there could not be direct or indirect discrimination between the sexes in relation to either of those potential payments or indeed any pay.

Indirect sex discrimination occurs “where an apparently neutral provision, criterion or practice (‘PCP’) disadvantages a substantially higher proportion of one sex unless that PCP is “appropriate and necessary and can be justified by objective factors unrelated to sex”. This comes from article 2(2), of the Burden of Proof Directive (97/80/EC).

Cases of indirect discrimination are quite common - we have bought them in respect of hours, homeworking and other aspects of work - anything in theory can be a PCP. When a case is heard in a tribunal the tribunal will firstly have to decide on the appropriate pool of individuals for comparison. Deciding on the correct pool is critical and so both the ex-employee and ex-employer will argue for the pool that most favours their case. Sometimes there is no argument about the correct pool. Once one has been decided upon, however, the tribunal has to decide whether the ‘provision, criterion or practice’ has a disproportionate impact on women (or men, as the case may be) within that pool. If there is no disproportionate impact that decides the case (in favour of the employer). However, if there is disproportionate impact the tribunal will then go on to consider whether the provision, criterion or practice is justified.

The Rutherford case, which we reported on in 2002 and 2006 concerned whether the law mentioned above insofar as it sought to deny redundancy payments and unfair dismissal compensation to those over 65.

Mr Rutherford, and one other man whose case was joined to his won in the original tribunal. The decision was that the pool should be those individuals aged 55 to 74 who were still in work or looking for work. From that pool it decided that the proportion of men who were disadvantaged by the 65 rule was greater that the proportion of women, that the difference, in the proportion of men being affected by the rule as against the proportion of women was significant enough to amount to indirect discrimination and that the age limit could not be justified. Our original case report in 2002 dealt with the resulting appeal to the EAT or Employment Appeal Tribunal. It decided that the wrong pool had been used and that the correct pool was all those who could claim unfair dismissal or a redundancy payment. The decision got a bit technical when it decided to consider the proportions of those who could claim unfair dismissal compensation and redundancy payments and having done so it decided that the proportions of men and women in that group were not different enough for an upper age limit of 65 to amount to indirect sex discrimination.

The Court of Appeal in 2004) agreed with the EAT. It went into more detail about both the correct pool and the EAT’s technical question of whether the law should look at the relevant proportions of those who weren’t affected by the 65 rule (the advantaged group) or the proportions of those who were affected. This was the EAT’s technical point. The Court of Appeal decided, having taken into account the important case of R v Secretary of State for Employment ex-parte Seymour Smith and another (No 2) from 2000 that, while it was not necessarily wrong to consider both groups, the main focus should be on the relative proportions of the advantaged groups, and that the employment tribunal had therefore been wrong to focus exclusively on the disadvantaged groups while ignoring the figures for the advantaged groups.

Mr Rutherford appealed to the House of Lords.

House of Lords’ Decision

Their Lordships unanimously rejected the appeal, thereby maintaining the decision of the EAT and the Court of Appeal. Its decision was that the upper age limit of 65 didn’t have a disproportionate impact on men as compared to women. This meant it wasn’t indirectly discriminatory.

We now go back to the original 2002 news article]

The Employment Appeal Tribunal or EAT has given judgment in the case of Secretary of State for Trade & Industry v Rutherford. This was on the issue of whether the upper age limits for claiming redundancy and unfair dismissal compensation are lawful under Article 141 of the Treaty of Rome.

The employees complained about the rules which stated that redundancy pay could not be claimed by employees over 65, and that unfair dismissal could not be claimed by those over the normal retirement age for the job (or 65 if there was no normal retirement age). Their arguments were that these provisions indirectly discriminate against men.

The employee’s claims were rejected by the EAT as it decided that employment tribunal was wrong to decide the limits had a disparate impact on men and were therefore indirectly discriminatory. It also ruled that, in any event, the social policy objectives of applying upper age limits were justified. It is not known whether there will be a further appeal to the Court of Appeal. In any case the government is planning to provide further regulations on the area of compulsory retirement ages under the EC Equal Treatment Framework Directive (No.2000/78) which will prohibit age discrimination from October 2006.