Employers don't need to justify age discriminatory behaviour in terms of "legitimate social policy objectives"

Seldon v. Clarkson Wright & Jakes [2010] Court of Appeal A2/2009/0149

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***** UPDATE *****    11/02/11      The Supreme Court decided it will hear an appeal in this case (of Seldon v Clarkson, Wright & Jakes) against the Court of Appeal's judgment which justified the imposition of a compulsory retirement age of 65.

• Regulation 3 of the Age Regulations allows employers to justify direct and indirect discrimination.
• Employers do not need to satisfy the test under article 6 of the of Framework Directive of 'legitimate social policy objectives' when justifying direct discrimination under Regulation 3.
• The employer must however act in accordance with the social or labour policy of the UK.
• A legitimate aim may be used to justify a discriminatory measure, direct or indirect, even when it is different to that specified when the measure was introduced.

The Claimant Mr Seldon was a partner in a firm of solicitors that had a policy of compulsory retirement at 65 years. Despite this being in accordance with the terms of the partnership deed he had signed, Mr Seldon made a claim for unlawful direct discrimination in the form of less favourable treatment on the grounds of age. The Employment Tribunal ruled, in accordance with Council Directive 2000/78/EC clarified by the ECJ in R(Age Concern England) v Secretary of State for Business Enterprise and Regulatory Reform [2009] ICR 1080, that the discrimination had taken place but was justified as a proportionate means of achieving a legitimate aim in that it enabled colleagues to become partners.

The Claimant in the Court of Appeal argued that justificatory aims must be of a “social policy/public interest nature”, that the firm in its case before the ET had not mentioned social policy or public interest aims, and that choosing an arbitrary age of 65 was not proportionate as any older age e.g. 66 would have been less discriminatory.

The ECJ held in Palacios de la Villa that article 6 (1) of Directive 2000/78 did not discount national measures failing to contain list in detail the aims justifying derogation from the principle prohibiting discrimination on grounds of age. Any such derogation is however only allowed for measures that are reasonable and objectively justified by legitimate social policy objectives such as ones relating to employment policy, the labour market or vocational training where the means of achieving the objective are appropriate and necessary. There is a high burden of proof regarding the justification of any aim relied upon.

In Palacios de la Villa, the ECJ held that, "The justification of measures providing for differences of treatment on grounds of age therefore falls to be assessed at member state level, within the context of national law”. The CA decided that this can allow for national rules granting discretionary powers or flexibility to authorities and individuals.

The CA makes the distinction between the UK law that must be justified in terms of social and employment policy, and an individual employer needing to have a social or employment policy aim when deciding on his retirement policy. All he would need to do is act in accordance, "with the social aim which has justified the legislative provision".

The ECJ in its judgment (Palacios de la Villa v Cortefel Services SA (Case C-411/05) [2009] ICR 1111, para 56) was quoted whereby, "it cannot be inferred from article 6 (1) of Directive 2000/78 that a lack of precision in the national legislation as regards the aims which may be considered legitimate under that provision automatically excludes the possibility that the legislation may be justified under that provision." Such legitimate aims justifying derogation from the principle prohibiting discrimination on grounds of age are of public interest and social policy objectives. The CA sees that flexibility is envisaged for individual employers when working within the social or labour policy constraints of the United Kingdom (para 19), that unlike the state, individual employers do not have to justify their retirement decisions in terms of social policy.

Legislatory inconsistencies may be remedied by the national court with the concept of ultra vires applying only "to radical cases where it is not possible or not permitted for the national court to adjust the regulation by the vigorous interpretative technique required by Marleasing SA v La Comercial Internacional de Alimentacion SA (Case C-106/89) [1990] ECR I-4135."

A legitimate aim argued in justification only after the event concerned is acceptable after the ruling in Schonheit Daft v Frankfurt Ohman [2004] IRLR 983, approved in Crossley v British Airways [2005] IRLR 423 was cited. The principle applies to indirect discrimination and direct discrimination.

There was an attempt to argue that this was a case where a justified rule (being required to retire at 65 has a legitimate aim and is a proportionate means of achieving that aim) could be unjustified in its application (the firm not being able to show that anyone was actually benefiting from the discrimination) but the CA upheld the EAT ruling that this was rare and didn't apply in this case.

The CA recognised that any particular age chosen for retirement would discriminate more against that age, but if a cut-off date could not be justified, then no retirement age would be feasible, an idea contrary to recital 14 of the Directive. An employer's aim to produce a 'happy workplace' is covered by the social policy justification for the UK Age Regulations. Allowing the possibility to retire with dignity can also justify a mandatory retirement age.

A court can take into consideration that parties of equal bargaining power may legitimately have agreed to a mandatory retirement age in a partnership.

The claimant's appeal was dismissed.