Seldon v Clarkson Wright and Jakes - Age Discrimination decision of the Court of Appeal

This judgement was delivered 24 hours before the announcement last week, that the coalition government would be removing the default retirement age in october 2011. The judgement was focused on determining the legality of a discriminatory clause in a Partnership agreement.

The key points established in this Judgement were thus:

a. The distinction between the respective duties of a Government and an Individual Firm to fulfil the Social policy objective. In effect the former have this obligation and the latter- in deciding to have a retirement age, do not (par.14); Waller LJ clearly favoured the argument of Dinah Rose for the BIS to that of Robin Allen for Seldon.

b. Justification of age discrimination: Following from the above- and quoting from Blake LJ’s dictum in the Heyday case- par 94.- age discrimination remains justifiable by a government for the over-arching purpose of creating a wider field of employment for young and old (?!?- some mistake surely since the effect here being specifically to deprive the old of work) –par 19.

c. The aim of the discriminatory clauses: The “dead men’s shoes” (policy giving associates assurance of partnership after a reasonable period and facilitating long term personnel progression) and “collegiality” (policy limiting the need for expulsion of partners on performance basis -in favour of retiring them based on age) of the Firm were upheld in any event as lawful- since the Court believed them to satisfy a social policy objective of a “happy workforce”. Note that its ruling on the point was that a Firm did not have this obligation i.e. to satisfy the social policy objective. He goes on to give his personal opinion on the justification of a retirement age i.e. to allow people to retire with dignity. This comment is more obiter (side comment) than ratio (substantial judgement) in that as a preamble he states that he has not read in full, the evidence adduced in the Heyday cased.

d. The ultra vires question. Whilst regulation 3 of the Employment Equality Age Regulations was arguably out of sync with Art 6(1) of Council directive 2000/78/EC. Art 6(1) of course provides exception to prohibition of age discrimination, to be only in respect of measures justified, by legitimate social policy objectives. The Court ruled that any disparity between a national legislation and Art 6(1) could be cured by judicial intervention and would not render the national law void for conflicting with the EC directive, unless it was a significant deviation

e. Ex post facto justification (Retrospective justification) - An aim which was not envisaged at the time a discriminatory clause was created, may be recognised even if it was conceptualised afterwards. In this instance Waller LJ ruled that the aims had been in view when the clause was created in any event.

f. Significance of consent- The Court ruled that contrary to the view of the ET and in line with the view of the EAT- consent to a discriminatory clause is binding and assumes that the clause is justified. This is very significant and may have major impact on collective agreements going forward.

g. Choice of 65 as an age- Waller LJ ruled that 65 as an age is justified in that any age chosen would prejudice persons outside of the age catchment e.g. a retirement age of 66 would in any event prejudice persons over 66 whilst benefiting persons over 65 but under 66. Thus there was no merit in arguing against 65 as a retirement age. This being side by side with other planks of his ruling as above, justifying the existence of a retirement age and contractual clauses enforcing it.

My comments:

An appeal is imperative because:The Judgement did not provide detailed clarification of:

a. The effect of Regulation 17 (Partnerships) of the Employment Equality Age Regulations on the Partnership Deed And;

b. How far Regulation 17 is compliant with or ultra vires Art 6(1) of the Directive. This being possibly because it was not emphasised in the Grounds of Appeal or indeed in the original Claim.I believe this is relevant because the focus of the Judgement ideally ought to have been on Partnerships, based on the distinct provisions for both categories. The judgment slightly muddies the waters between the two and could be exploited by employers.

Whilst the removal of the Default Retirement Age would steal most of the thunder of this judgement, it remains to be seen what the regulations will say specifically with regard to implementation and how much of a gap will be left for this Judgement to be applied. It honestly is difficult to say in the absence of the same;

Significance of consent. The judgement provided that the discriminatory clause which was negotiated and agreed from “a position of equal strength” would be binding and provide justification of a discriminatory clause. This seems to overrule Loxley v BAE Land Systems, which provided that where a Collective agreement had been negotiated for staff by a Union, it would be deemed to have been fairly negotiated but would not amount to justification of a clause which is discriminatory. This is extremely important, since it could prospectively affect thousands of workers subject to collective agreements and indeed Partnerships.Conclusion:This story is not finished, this matter will have to go to the House of Lords to be resolved, pure and simple, it asks more questions than it answers. However I do find that until the publication of the regulations removing the default retirement age, there is not much guidance for a positive resolution of all questions arising from this.