Is a compulsory retirement age justified?
An employer operating a compulsory retirement age may be at risk of facing claims of direct age discrimination. Direct age discrimination occurs where because of age, an employer treats an employee less favourably than it treats or would treat other employees. However, an employer can have a defence if it can show that its treatment of the employee is a proportionate means of achieving a legitimate aim. This is known as justification.
According to case law, justification in the context of compulsory retirement must be by reference to an aim of public nature that is consistent with social policy aims of the state. This can include “inter-generational fairness” and “dignity”. However, the treatment must also be an appropriate and necessary means of achieving the aim. This principle of proportionality requires an objective balance between the discriminatory impact of the measure and the needs of the employer.
Compulsory retirement age
The employer operated an Employer Justified Retirement Age Policy (EJRA) with a retirement age of 67. The policy included an extension procedure under which an employee could apply to work beyond the EJRA.
Professor P unsuccessfully applied for an extension of employment, and was compulsorily retired at 67. He issued claims in the Employment Tribunal (ET) of direct age discrimination and unfair dismissal. The ET found the EJRA to be justified and the claims were rejected.
Professor E applied and obtained an extension of his employment. A further application for extension was unsuccessful and he was compulsorily retired under the EJRA. He issued claims of direct age discrimination and unfair dismissal. His claims, heard by a different ET, succeeded. The ET found that the employer had not shown that the EJRA was justified.
The Employment Appeal Tribunal (EAT) heard both appeals at a combined hearing. It dismissed both appeals.
Both ETs found that the employer had the following three legitimate aims – a) inter-generational fairness, b) succession planning, and c) equality and diversity. The EJRA was said to facilitate measures in achieving those aims by ensuring vacancy creation was not delayed and recruitment into senior academic roles might take place from a younger, more diverse cohort.
In Professor P’s case, there was limited evidence demonstrating the impact of the EJRA but the ET considered that this was because the EJRA was relatively new. It gave weight to survey evidence in which 26% of retired staff had said they would have continued for an average of 3 years in the absence of the EJRA. It also gave weight to the mitigating effect of the extension provisions. It found that the discriminatory impact was justified.
In Professor E’s case, the ET found that statistical analysis showed the rate of vacancies created by the EJRA was trivial (2-4%). The ET found it had not produced sufficient evidence to show the EJRA could contribute to the realisation of the legitimate aims. It also found that the discriminatory impact was severe and not mitigated by the extension provisions. The ET found that the EJRA was not proportionate and so not justified.
Both ETs received different evidence in relation to the degree to which the EJRA impacted on the creation of vacancies. In addition, both received different evidence in respect of the detriment suffered by those to whom the EJRA applied. The EAT found that the conclusions in both ETs were open to them on the evidence before them.
In the event of a claim, the burden in on the employer to prove justification. It is then for the Tribunal to reach its own decision, based on the facts of the case.
In this judgment, the EAT has upheld two judgments which came to different conclusions on the issue of justification. As the EAT noted, it is “possible for different ETs to reach different conclusions when considering the same measure adopted by the same employer in respect of the same aims”.
This leaves employer facing what appear to be conflicting decisions relating to a particular policy. However, the EAT confirmed that its task is not to find a single answer. It is to consider whether a particular decision is wrong in law. In this case, each ET came to conclusions open to them on the evidence.
However, this judgment gives guidance on the legitimate aims that may be relied on by employers seeking to justify a compulsory retirement policy. It is also a reminder that employers should consider how they will measure the effect of their policy on the legitimate aims. It will be important for employers to be able to evidence the impact that a compulsory retirement age has on the achievement of the aims identified. Statistical evidence and case studies may help the employer to demonstrate the achievement of those aims.
29 November 2021
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