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Retirement and Age Discrimination - Can Transitional Protections to Minimise the Impact of Public Sector Pension Reforms Be Justified?

on Friday, 09 February 2018.

In two recent decisions, the Employment Appeal Tribunal (EAT) considered the introduction of transitional provisions announced as a result of the major reforms to both the Firefighters' Pension Scheme and the Judicial Pension Scheme.

In one case, the EAT upheld the finding that the provisions resulted in unlawful age discrimination and in another, a decision is awaited by a fresh Tribunal in relation to whether the transitional provisions could be justified by the Government as appropriate and reasonably necessary.

Background

In March 2011, the Hutton Report set out proposals for reform of the public service pension schemes. This was in an effort to make the pension schemes more sustainable. The Government chose to enact the reforms though the Public Sector Pensions Act 2013 ("the Act"). This resulted in the introduction of the New Firefighters Pension Scheme (NFPS) and the new Judicial Pensions Scheme (NJPS).

Ms R Sargeant and Others v London Fire and Emergency Planning Authority and Others

The Claimants in this case were all firefighters who were members of the Firefighters' Pension Scheme (FPS). The Act applied transitional measures to move firefighters across from the old FPS to NFPS from 1 April 2015.

The transitional arrangements  meant that firefighters aged 45 or more on 1 April 2012 were entitled to remain in the firefighters pension scheme with its normal age of 55. Those aged 41 or more but less than 45 on 1 April 2012 were entitled to tapered protection, which allowed them to stay in the Firefighters' Pension Scheme for a limited period before transferring to the (NFPS). Firefighters aged below 41 on 1 April 2012 were transferred to the NFPS without any transitional protection.

Lord Chancellor and Secretary of State for Justice v McCloud

The Claimants in this case were all members of the JPS, which closed on the 31 March 2015. It's members were automatically transferred to the NJPS on 1 April 2015.

Transitional provisions were put in place and, dependant on age, some judges were allowed to remain members of the JPS until retirement or until the end of a period of 10 years tapered protection.

The Claims

Over 5,000 Claimants transferred to the NFPS and NJPS without the benefit of transitional protection and subsequently brought claims against their employer and the Government departments responsible for the changes. The Claimants all alleged that the transitional measures constituted unlawful age discrimination.

In addition, the members of the NJPS argued that the treatment amounted to a breach of the sex equality rule imposed on pension schemes, and indirect sex and race discrimination. The indirect sex and race discrimination claims were founded on the increased diversity of the judiciary in the most recently appointed judges when compared to older members.

It was widely accepted that the Claimants were being treated less favourably on the grounds of age and that, unless justified, would result in legitimate claims of unlawful age discrimination.

The Decision - Sergeant

At first instance, the Employment Tribunal (ET) found in Sergeant that although the Claimants were treated less favourably because of their age, the arrangements and the transitional arrangements met the government's legitimate aims of protecting those closest to normal pension age, taking in to consideration workers' legitimate expectation that their pension entitlement would not significantly change when they were so close to retirement. Effectively, the tapering provisions were introduced to ensure that there was not a "cliff edge" between the group of firefighters who were protected and those who were not and to ensure consistency across the public sector.

In terms of whether the transitional arrangements amounted to a proportionate means of achieving the Government's aims, the ET found that it was reasonably necessary to draw a line somewhere and the cut off was in effect a social policy decision in which the Government had a broad discretion. The ET found on that basis the age related treatment was objectively justified. This decision was appealed to the EAT.

The EAT upheld the ET's decision in relation to legitimate aims, however it held that the ET had been mistaken when it had considered the issue of proportionality. The ET had found that the means were within the Government's margin of discretion - an approach which was derived from European case law. Previous domestic case law on the issue of proportionality established that careful consideration of the organisation concerned was required to assess whether the objective is met and whether there are other measures which are less discriminatory which would meet the aims. These claims would be remitted back to the ET for consideration of objective justification alongside the proportionality question in the age discrimination claims.

The Decision - McCloud

The ET in McCloud concluded that the Claimants were treated less favourably than their comparators due to their age, and that the Government had failed to show that their treatment of the Claimants was a proportionate means of achieving a legitimate aim. Therefore the Claimant's claims of unlawful age discrimination succeeded. The ET applied the same reasoning in relation to the claims of indirect race and sex discrimination, therefore these claims also succeeded. 

The Government appealed this decision, which was rejected by the EAT. The EAT considered that the ET had applied the correct approach and that the transitional provisions went beyond what was necessary to achieve consistency or to protect those closest to retirement. However, the EAT upheld the tribunal’s finding that the transitional provisions were in any event not proportionate. It was appropriate for the tribunal to consider, with an enhanced level of scrutiny, whether the adoption of the transitional provisions in respect of judicial pensions had such an extreme discriminatory effect that it so outweighed the entitlement of the Government to pursue social policy objectives.

Best Practice

The appeal succeeded on a limited basis with regards to Sargeant, therefore we await the Tribunal's decision on this remitted matter for further clarity. The Government will be required to produce evidence to demonstrate the level of scrutiny carried out was sufficient when considering whether there were any less discriminatory measures they could have taken to meet its legitimate aims. 

It will be interesting to see if this decision follows McCloud, especially due to the similarity of facts in each of the cases.


For more information please contact Allison Cook in our Employment Law team on 0117 314 5466.

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