Nick Hine of Hine Legal identifies actions for employers in relation to workforce demographics.
Lucy Kellaway (born 1959) of the Financial Times recently wrote an article for the BBC suggesting the solution to rising unemployment is for all employees to be forced to retire at the age of 50 years of age. There were a number of supporters and objectors to her proposal, which she accepted was unworkable in practice. It is also our view that the idea is unworkable and would result in a significant reduction in efficiency. However, while it may only be a coincidence, it cannot be denied that unemployment figures have risen since the default retirement age was abolished in April 2011 and as a result of the introduction of the Equality Act in October 2010.
While a default retirement age was made unlawful in principal as being discrimination on grounds of age, unlike other strands of discrimination, it is possible to justify both direct and indirect age discrimination. Organisations are, therefore, permitted to retain a default retirement age, or indeed, discriminate in other ways, if they can show that the discrimination is a proportionate means of achieving a legitimate aim... clear as mud!
Thankfully the Supreme Court recently provided some guidance on what can be a legitimate aim in its judgements in two cases (both involving legal advisors!). The first concerned the imposition of a directly discriminatory retirement age and the other concerning the indirectly discriminatory effect of the default retirement age on an individual. Both cases concern the now repealed Employment Equality (Age) Regulations 2006; however the same wording is contained in the Equality Act 2010.
The Supreme Court has decided there is be two different tests for direct and indirect age discrimination.
Direct discrimination occurs where, because of a protected characteristic, for example age, an employer treats an individual less favourably than another (you are too old to do...).
Indirect discrimination occurs where an employer applies an apparently neutral provision, criterion or practice that applies equally to all staff, but places the particular individual and those who share their protected characteristic, for example age, at a particular disadvantage (e.g. a shift pattern, fitness levels etc).
Direct Age Discrimination: To justify direct age discrimination the legitimate aim must be social policy aims in the public interest, and the individual aims of the employer are insufficient. The Supreme Court in Seldon found that the social policy aims in the public interest are: intergenerational fairness (which includes facilitating access to employment by young people and workforce/succession planning) and dignity (which includes reducing the need to dismiss older workers on the grounds of performance). Not only must an employer justify the imposition of a default retirement age, it must then show that the age chosen is both appropriate and necessary. This will involve considering whether there are other, less discriminatory measures which could achieve the same aim. Employers must, therefore, consider whether an older retirement age would be just as effective. Seldon v Clarkson Wright & Jakes (a partnership)  UKSC 16
Indirect Age Discrimination: The range of aims which can justify indirect age discrimination is wider than the aims which can justify direct age discrimination. It is not limited to social policy aims but can encompass a real need on the part of the employer's business, for example, in this case a need to recruit and retain sufficiently high calibre staff. As with direct age discrimination the employer will also need to show that the provision, criterion or practice used to achieve that real need is appropriate and necessary, considering whether there are other, less discriminatory measures which could achieve the same aim. Homer v Chief Constable of West Yorkshire Police  UKCS15
Practical Steps for each employer to action:
1. Do your employment contracts still contain a default retirement age? If so, can you objectively justify the inclusion by reference to one of the social policy aims of intergenerational fairness or dignity? Would an older age be more proportionate? Should you remove it? What do other organsations do in your sector?
2. In any event we suggest you regularly have conversations with your employees of all ages regarding their plans for the future. You may find that your older employees would like to retire or reduce their working hours earlier than you had thought; it will also have given you a greater understanding of your younger workforce's aims. These conversations can form part of the annual appraisal process.
3. Consider your recruitment/promotion processes and policies. Are any of the requirements indirectly discriminatory? If so, is there a real need for your business to retain those requirements?
If there is anything in particular you would like to hear more about please do let us know, either by commenting on the blog or by emailing us at email@example.com. Alternatively you can also find us on LinkedIn, Twitter and Facebook. We would like to hear from you.