Landmark case law: when age discrimination is justified

Businesses can discriminate against their employees on age grounds, providing the treatment is a proportionate means of achieving a legitimate, or fair, treatment of all employees, the employment tribunal has explained.

Under the Employment Equality (Age) Regulations 2006, discriminating against employees is illegal, unless it is justified. This case, the first of its kind, clarifies what 'justified' can mean, how employers could use the defence of justification, and gives suggestions as to how tribunals may apply the defence.

The high-profile dispute concerned the small print of how a law manager, aged 54, missed out on retirement payments when his ex-employers, a large City law firm, restructured their pension scheme. While the case hinges on details, the ruling has implications to all businesses. Because of the changes to the scheme, the employee, who retired at 54, could only claim a part pension, yet employees who retired at 55 could claim the full pension. The tribunal agreed that this was direct age discrimination. However, the firm argued that they had only restructured the pension scheme because of 'intergenerational unfairness' in the old scheme. Had the scheme not been reorganised, younger staff would have been faced with ever-growing contributions but ever-smaller pensions.

The tribunal confirmed the firm had discriminated against the employee because of his age - but that the treatment was justified, because it was proportionate and affected the treatment of others in a different age group, and so legal. The tribunal also pointed out that despite lengthy consultation, no less discriminatory solution could be found.

Businesses should note that currently, 'justification' affects only age discrimination law; there is no such defence in cases of racial and sexual discrimination.

Operative date: Immediate