18 December 2017
PENSIONS: APPEAL AGAINST AGE DISCRIMINATION – DAY 4 AND GENERAL SUMMARY
Day four (Thursday 14 December 2017) began with the Government’s defence of the Employment Tribunal’s decision which, their QC said, was more complete and coherent than the Tribunal’s decision in the judges’ case. He characterised our assault on it as an allegation that the decision did not set out sufficient reasoning to justify the conclusions that the Tribunal had reached.
In much the same way that we did, he went through the judgment paragraph by paragraph. He argued that the Employment Judge correctly summarised the case that both sides had put to her, meaning that she understood the arguments, that she set out the key facts on which the arguments were based, and having done so she could not be criticised for saying that she preferred one side of the argument to the other.
In dealing with the facts as found by the Employment Judge, their QC noted that the Government didn’t decide to offer transitional protections “as a sop to the trade unions” – but because it decided that those who were closest to retirement needed the greatest protection. He said that being closer to retirement is not just the same as being older, because workers who are closer to retirement have a more lively interest in when they can retire and what their pension will be. That, he said, is not an issue which is solely about the financial consequences of offering protection to some but not to others – it is about fairness as a matter of social policy or political judgement, which are for the elected Government to make.
There was some discussion about what the role of the trade unions had been. The Government accepted that the FBU’s position had always been that it wanted full protection for everyone, but when that wasn’t accepted by the Government, it promoted the Scottish Government’s position as a fall-back, arguing that protection should be calculated from the age at which each firefighter expected to be able to retire, between ages 50 and 55, and not from age 55 for everyone. The Government’s QC said that this fall-back position was also discriminatory but, pressed by the Judge, he accepted that what the FBU or the TUC as a whole might have been prepared to accept was irrelevant. The FBU has challenged the Scottish Government’s ‘solution’, and anyway an employer is not permitted to discriminate simply because a trade union has asked it to do so.
Our QC came back by saying that the case isn’t about whether or not the Employment Judge understood the factual or legal issues, it’s about whether she subjected the Government’s decisions about transitional protection to any proper scrutiny. She didn’t analyse the facts that the Government put forward as the basis for its decision, and it is not enough to say that the Government may well have good social or political reasons for doing what it did. The Government has to provide concrete and rational reasons for doing what it did, which the Tribunal must then weigh up for itself. What the Employment Judge actually did was surrender her role altogether – the law says there must be a balancing exercise, based on the concrete evidence, and that balance must be struck by the Tribunal. The Employment Judge allowed the Government to strike the balance without examining the issues herself.
The parties then dealt with the arguments about sex and race discrimination, and equal pay. The reason why they arise at all is that as time has gone by, the sex and racial balance of the fire and rescue service has become less predominantly white and male; so if you discriminate against younger members you also discriminate indirectly against female and BME members. Looked at in terms of equal pay, there is a hidden consequence: if the age discriminatory barrier is removed so that younger female firefighters are given full protection, then the same protection must be given to younger male firefighters – otherwise they are discriminated against on the grounds of their sex.
The legal tests for indirect discrimination (on the grounds of sex and/or race) and equal pay are slightly different from the test for direct age discrimination. The Fire and Rescue Authorities’ QC, who argued the case on this point for the other side, said that we were trying to turn an age discrimination case into a sex or race claim but, he said, producing statistics showing that younger firefighters are more likely to be female or of BME origin doesn’t mean you can turn one claim into the other – you have to show that sex or race is the reason for the less favourable treatment.
Our QC pointed out that as a matter of law, recently decided by the Supreme Court, that’s not right. You have to show that the same sort of provision, criterion or practice causes one category of member to be disadvantaged, but if the advantaged and disadvantaged categories have a statistically significant gender or race imbalance, you do not have to show why. The employer has to justify the provision, criterion or practice.
The day finished with an agreement, first raised at the end of day three, that the Fire and Rescue Authorities’ appeal on a technical issue will be dealt with at a subsequent hearing. They say that they should not be in the firing line because they were only doing what the regulations told them to do. They lost this argument in the Employment Tribunal, but if we win our appeal they will be able to raise it again. Importantly, the Government could not raise this defence.
What Happens Next?
The Judge said he would let us have his decision in the second half of January.
Bearing in mind that we are dealing with two appeals – ours and the judges’ – and bearing in mind that the findings of fact in the judges’ case are fairly clear but they are almost entirely absent in ours, there are a number of possible permutations. We could both win, with the EAT concluding that the Government did not have a legitimate aim at all, in which case the Government would have to decide whether or not to appeal to the Court of Appeal. The EAT might conclude that the Government did have a legitimate aim, but there was no proper balance struck in the judges’ case (in which case the judges win altogether), but in our case the balancing exercise was not conducted at all, in which case we end up back in the Employment Tribunal so that it can be. We might end up being separated from the judges again.
It is also possible that the EAT will refer our case to the Court of Justice of the European Union for clarification of one issue of European law: if a discriminatory provision is introduced for political reasons, what evidence must the Government offer to justify it, and how should the court balance the political need against the damage that it does to employees who are discriminated against?
Some Reflections On The Arguments
Despite the thousands of pages of evidence presented to the EAT, both cases are going to come down to a few key legal principles.
Everyone knows that the transitional protections discriminate on the grounds of age. The Government has admitted that. Everyone knows that the discrimination is direct discrimination – you win or lose just because of your age, not because you fail to meet some other criterion which, as it happens, turns out to be linked to age.
Direct age discrimination is unusual because unlike direct discrimination on the grounds of sex, race or other protected characteristics which can never be justified, direct age discrimination can be. It is permitted in European law and also in UK law, but the tests are different:
- In European law, EU member States may provide that differences of treatment on grounds of age do not constitute unlawful discrimination if “they are objectively and reasonably justified by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary”. So some margin of discretion is allowed for discrimination on social policy grounds.
- In UK law, direct discrimination is permitted if the Respondent can show that its treatment of the Claimant was a “proportionate means of achieving a legitimate aim”. So there is no express margin of discretion for discrimination on the basis of some social policy objective. This provision applies in the private sector too, where social policy cannot have very much scope (if any).
The key question is whether the Government, when making pension provision for its own employees, has to meet the requirements of both (as we say), or whether it only has to meet the European law threshold (as the Government says). Does the Government have more right to directly discriminate on the grounds of age against its own employees than a private sector employer?
If meeting a social policy objective is enough, what sort of social policy meets the mark? Previous cases have given some examples of what is enough, usually in the context of imposing a compulsory retirement age – freeing up employment or promotion opportunities for younger workers, for example, or allowing employers to retire older employees without having to go through an undignified capability procedure.
But what sort of social policy are we dealing with exactly? The Government’s case on this issue has been a moving target. It started by saying that younger workers did not need protection because they had enough time to make good any damage to their pension. That quickly unravelled: the cost of making it good is extortionate, it simply transfers the burden of a smaller pension tomorrow into lower take-home today after additional pension saving is taken into account, and anyway the people who are in the least need of protection – those who already have the biggest accrued pensions – are the ones who get the biggest advantage.
So the Government changed tack. It said that the objective (the ‘legitimate aim’) was to protect workers who were closer to retirement in the sense that they had more concrete plans for their retirement. It becomes a question of what feels fair, not what the financial consequences are. It changed again, and said it was to protect those who were closer to retirement in the sense that they had most cause to believe that their pension arrangements would not be disturbed in their final years – don’t upset the expectations that they had been led to believe in.
And if meeting a social policy aim is enough, what does the Government have to do to prove it? It should be common ground that the tribunal’s role is to balance the legitimacy of the aim that the Government is trying to achieve against the disproportionality of the effects on different age groups. The Government cannot say it will discriminate one way or the other just because it feels ‘fair’ to do so. The European cases make it clear that mere generalisations will not do. A proper explanation, backed up by evidence, must be provided so that the tribunal can reach its own judgment in the balancing exercise.
And what role can, or should political considerations play? The Government made much of the fact that these decisions were taken at Cabinet level, affected millions of public sector employees, and went through Parliament. The more ‘political’ the decision, according to the Government’s case, the less inclined the courts should be to become involved by demanding concrete evidence of the objectives it was aiming to achieve and the means it was using. But if that’s right, where do you stop?
There is plenty here for the judge to think about.
In closing, can I thank Andrew Short, our QC, and Lydia Seymour, our junior barrister, as well as Ivan Walker who has helped us navigate our way through these complex issues and made these reports understandable to our officials and members.