October 29 2007 Employment Law Enews

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RETIREMENT AGE IS LAWFUL

The European Court of Justice (ECJ) has handed down its judgment in a Spanish case that may have important ramifications for UK age discrimination legislation.

Palacios de la Villa v Cortefiel Servicios SA

Under Spanish law, collective workforce agreements can provide for the termination of employment when an employee reaches normal retirement age, subject to certain conditions. This was challenged by an individual who claimed it was contrary to the age discrimination provisions in the Equal Treatment Directive (which required the introduction of age discrimination legislation in European member states).

The ECJ has decided that whilst on the face of it the Spanish retirement provisions are discriminatory on the grounds of age, they are justified for the legitimate policy aim of seeking to promote employment opportunities for younger workers.

Heyday challenge

In the UK, the retirement provisions of the Age Regulations have been challenged by Heyday (part of Age Concern), who are claiming that the default retirement age of 65 is prohibited under the Directive. This case has also been referred to the ECJ for determination. It has been suggested that the outcome of the Spanish case means that the Heyday challenge is likely to be unsuccessful. However, there are significant differences between the UK and Spanish laws on retirement and the Government will still have to show that the default retirement age is justified. There is therefore no guarantee that the outcome of the Heyday case will be the same as the Spanish case. It is unlikely we will have the ECJ?s decision before the end of 2008. If the Heyday challenge succeeds, it is likely the default retirement age of 65 will be removed. In any event, the Government has already committed to reviewing the retirement age in 2011.

PENSION AMENDMENTS WERE JUSTIFIED

An employment tribunal has given its decision in another high profile age discrimination case, involving a former partner of a City law firm. This is one of the first age discrimination cases to be fully heard by a tribunal, and whilst the decision is not binding on future tribunals it provides an interesting insight in how tribunals are likely to approach similar issues.

Bloxham v Freshfields Bruckhaus Deringer

Mr Bloxham took early retirement from the firm at the age of 54. He claimed he was forced to do so as a result of amendments being made to the firm's pension scheme, which would have applied to him if he stayed beyond the age of 55. He claimed this discriminated against him on the grounds of his age.

The tribunal accepted that Mr Bloxham had been treated less favourably on the grounds of his age, but decided that the less favourable treatment was justified. The firm's reason for making amendments to the scheme was to reduce the burden on younger partners who were supporting the pensions of those who had retired. The intention was to provide a more sustainable scheme for the future, in view of the fact there were more retired partners than active ones. Since the pension arrangements involved the distribution of a defined sum by way of annual profits, the tribunal accepted that any amendments to the scheme would necessarily involve the balancing of conflicting interests.

The tribunal noted in particular the requirement to look at the context of Mr Bloxham's treatment; the fact that changes to the rights of one age group would directly affect the treatment of persons in another age group. The firm put in place transitional arrangements to protect the interests of those who were already above or close to retirement age. In the tribunal's view, the firm had done all it reasonably could to mitigate the adverse effect on partners nearing retirement age.

Comment

In this case the tribunal emphasised the need for employers to consider the effect on employees of different age groups whenever a change to a pension scheme or employment policy is considered. This recognition that eliminating inequality for one group will have an adverse effect on another group may be helpful to employers having to make similar changes to pension schemes or other policies. However, it should be remembered that this case is specific to its facts and a different tribunal may take a different approach to the issue of when discrimination is justified.

NO RELIGIOUS DISCRIMINATION

The issue of dress codes at work has often been contentious, and since the introduction of regulations prohibiting discrimination on the grounds of religion and belief employers have been faced with the additional difficulty of considering to what extent religious beliefs have to be taken into account.

There have been well-publicised recent cases concerning the wearing of religious jewellery and headscarves. Most recently, the EAT has considered the issue of whether a Rastafarian who wore his hair in dreadlocks was discriminated against because of his religious beliefs.

Facts

Mr Harris was a driver employed by an agency, working for NKL Automotive Ltd. Concerns were expressed by the company that his hair was untidy and that he did not represent the company well. Mr Harris subsequently complained that he had been discriminated against because of his hair. He claimed he had not been allocated work and had not been taken on by the company as a full time employee, unlike some of the other agency drivers. He brought a grievance alleging that he had been discriminated against because of his Rastafarian beliefs, but did not specifically make reference to the fact his hair was in dreadlocks.

Held

The tribunal found the company was not aware that Mr Harris wore his hair in dreadlocks, and was not aware of his Rastafarian beliefs until he lodged his grievance. Whilst the company did not object to long hair, they had a dress code and insisted upon a tidy appearance. It dismissed Mr Harris' claims for both direct and indirect religious discrimination.

The tribunal's decision was upheld on appeal to the EAT. It agreed with the tribunal that it was legitimate for the company to require tidy hair, whether or not it was worn in dreadlocks.

Comment

Both the tribunal and the EAT accepted, perhaps unsurprisingly, the respondent?s concession in this case that Rastafarianism is a philosophical belief falling within the scope of the Employment Equality (Religion and Belief) Regulations 2003. It would be very difficult to argue otherwise, given the broad definition of the beliefs covered by the Regulations. In addition, the case provides some support for employers seeking to enforce a dress code, although it should be born in mind that generally some flexibility in a dress code is advisable where possible to accommodate those with particular religious beliefs.

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