Government Fails to Justify Age Discrimination

In the case of McCloud and others v Lord Chancellor and another, the government has failed to show that its more favourable treatment of older workers could be justified.

Whilst the case will be important for the reform of state pension schemes generally, it also illustrates some important issues for all employers to consider.

Legal Background

Under the Equality Act 2010 (EqA 2010), direct age discrimination (where A treats B less favourably because of their age) can be justified if the treatment is a proportionate means of achieving a legitimate aim. Age discrimination is unique in this regard - no other form of direct discrimination can be justified.

The courts have held previously that to justify direct age discrimination it is not enough to identify a business need of the employer concerned - there must also be a wider social policy aim.

Facts

The claimants were all members of the Judicial Pension Scheme (JPS) which closed on 31 March 2015. The scheme was replaced by the New Judicial Pension Scheme (NJPS) and all serving judges were compulsorily transferred. The NJPS provided a number of less valuable retirement benefits for judges, compared to the JPS. The NJPS also incorporated transitional provisions that allowed older judges, dependent on their age, to remain members of the JPS until either retirement or until the end of a period of tapered protection.

The claimants argued that the transitional provisions directly discriminated against younger judges (who received less or no protection under the transitional arrangements).

It was admitted by the government that the transitional provisions were less favourable to the claimants because of age. However, it argued that the treatment could be justified on the grounds that it protected those closest to retirement from the financial effect of pension reform and that there was a need for consistency across the public sector when dealing with pension reforms.

Employment Tribunal Decision

The Employment Tribunal (ET) held that the government had failed to show that the treatment was justified.

Since the government had referred to the protected group on the basis of age, further evidence was required to show a legitimate aim and the government failed to produce a rational explanation for the more favourable treatment of the older judges. In fact it was the older judges who would be those least affected by the introduction of the NJPS, as they were the closest to retirement.

The ET noted that consistency across the public sector could in principle be a legitimate aim, but the government had failed to adduce evidence of how consistency was capable of contributing to their social policy objective, and there were also significant inconsistencies between the NJPS compared with other reformed pension schemes.

In any event, the ET found that even if the government's aims had been legitimate, the transitional provisions were not a proportionate means of achieving the aims because they went beyond what was necessary to achieve consistency or to protect those closest to retirement.

Best Practice

If an employer is going to treat one age group differently to another then it must be able to identify a social policy objective (not just a business need) if it wants to be able to justify such treatment. It must also ensure that the method of implementing the objective is proportionate.

In this case, the ET's decision is perhaps not surprising. The government's objective of protecting older judges only served to benefit those with most protection under the old scheme. The case is potentially important in respect of pension reform in the public sector as similar transitional provisions have been adopted for other schemes, for example those relating to the NHS, police and fire service.

For more information please contact Michael Halsey in the Employment Law team on 0117 314 5401.