Employment Update

Partner loses age discrimination claim

Capturing the headlines as one of the first decisions under the new age equality legislation, an employment tribunal has confirmed that a law firm did not discriminate unlawfully on the grounds of age when it made changes to its pension arrangements. The decision sheds some light on the future interpretation of the Employment Equality (Age) Regulations 2006, particularly in relation to the justification defence (which unusually applies to both direct and indirect age discrimination), providing some guidance on the most recent 'strand' of discrimination legislation.

In Bloxham v Freshfields Bruckhaus Deringer, Freshfields overhauled its pension arrangements for partners in an effort to address the conflicting interests between different generations of partners. In doing so, it put in place transitional arrangements for those partners close to retirement age. Mr Bloxham subsequently claimed age discrimination on the basis that he was disadvantaged by the transitional arrangements.

The tribunal confirmed that he had suffered direct discrimination as he had been treated less favourably on the grounds of age by virtue of the transitional arrangements (which subjected him to a 20% discount for early retirement). However, it held that the treatment was justified and therefore lawful. Interestingly, the Tribunal noted that the justification test (i.e. that the treatment was justified as a proportionate means of achieving a legitimate aim) was not merely met but 'comfortably passed' by Freshfields.

The tribunal accepted Freshfields' arguments, which included the following:

• the reform of the pension scheme was necessary for the firm and finding a fair and acceptable solution was a difficult matter;
• one of the main drivers of the reform was the unfairness of the existing arrangements to younger partners;
• the solution was arrived at after many months of work and analysis, including expert assistance;
• the consultation process was extensive and adequate and included the direct participation of Mr Bloxham;
• the reforms themselves were subject to the consent of a two-thirds majority of the partners; and
• no alternative less discriminatory solution could be conceived.

It remains to be seen whether this decision will be appealed. In the meantime, although it is a first instance decision and therefore not binding on future tribunals, the tribunal's consideration of the above factors provides some guidance as to how the concept of justification will be approached in future cases.

ECJ decision in Spanish age discrimination case

As if one major decision on age discrimination legislation isn't enough, along comes another! The European Court of Justice (ECJ) has, this week, confirmed that the Equal Treatment Framework Directive (which prohibits discrimination on a number of grounds, including age), does not prohibit a law which provides for compulsory retirement clauses in collective agreements.

Although this case concerned Spanish law, it has ramifications for all EU member states. As noted in earlier updates, Heyday is in the process of challenging the UK's own retirement provisions. Although this decision is unlikely to be welcomed by Heyday, it does provide useful guidance for all employers on whether retirement provisions are discriminatory on the grounds of age.

In this case, Palacios de la Villa v Cortefiel Servicios SA, the ECJ examined a Spanish legal provision which allows clauses in collective agreements to provide for a contract of employment to be terminated on the grounds that a worker has reached the normal retirement age, providing that he has completed the minimum pension contribution period and satisfied the conditions laid down in Spanish social security legislation for entitlement to a pension.

Earlier this year (as noted in our February update), the Advocate General delivered an opinion in this case, stating that the principle of non-discrimination on the grounds of age under the Equal Treatment Framework Directive did not apply to national laws which set retirement ages. The ECJ, however, did not agree with this reasoning. It considered that the Spanish legal provisions should be regarded as  rules relating to 'employment and working conditions, including dismissals and pay', which were within the scope of the Directive. It did agree, however, with the Advocate General that the Spanish law was introduced in the interests of promoting employment and takes account of the fact that the workers are entitled to financial compensation by way of a retirement pension. The law was therefore objectively justified and not prohibited by the Directive.

Step 1 letter need not state employer is contemplating dismissal

The Employment Appeal Tribunal (EAT) has confirmed that it was 'implicit' in the wording of a Step 1 letter under the standard disciplinary and dismissal procedure that the employer was considering dismissal or some other disciplinary action. The fact that the letter did not expressly refer to dismissal therefore did not constitute a breach of the statutory procedure.  In addition, the EAT confirmed that although the statutory procedure refers to Step 1 and Step 2, it is not a requirement that the Step 2 events (i.e. providing information as to the basis of the allegations before the disciplinary meeting) should follow the Step 1 letter.

In this case, Homeserve Emergency Services Ltd v Dixon, the manager of two employees had caught them red handed using a company vehicle for private work. When confronted by the manager, both employees admitted the offence. One of the employees brought a claim of unfair dismissal. The tribunal found the dismissal was automatically fair as the company had failed to follow the correct statutory procedure: at Step 1, the letter did not state that dismissal was a possible outcome of the meeting and at Step 2, the employee was not given sufficient detail about the allegations to enable him to put his side of the story properly. 

The EAT disagreed with both findings, as outlined above. It should be noted that this decision is fact-specific and perhaps understandable, given that the employee was caught in the act by his manager and the Step 1 letter notified the employee that his manager would present the facts surrounding the allegations at the meeting. However, employers should avoid relying on 'implicit' compliance with the statutory procedures and ensure that the risk of dismissal is explicit in all Step 1 letters.

Disability discrimination - failure to discuss redeployment did not constitute a failure to a make reasonable adjustment

The EAT has once again confirmed that a failure to discuss options for alternative work with a disabled employee on long-term sickness absence is not itself a failure to make reasonable adjustments under the Disability Discrimination Act 1995.

In Scottish and Southern Energy plc v Mackay, the EAT followed the earlier authority of Tarbuck v Sainsbury's Supermarkets update, which noted that an employer does not have a separate and distinct duty to consult a disabled employee in relation to its duty to make reasonable adjustments. 

"Associative" disability discrimination in the ECJ

As previously reported, a case has been referred to the ECJ to ask whether the prohibition of disability discrimination under the Equal Treatment Framework Directive covers discrimination against a non-disabled person on the grounds of their association with a disabled person.

In Attridge Law and anor v Coleman, Ms Coleman, who is the primary carer for her disabled son, claimed that she had suffered disability discrimination at work due to her son's disability (e.g. she claims that she was subject to unfair treatment when she requested time off to care for her son).

The ECJ heard Coleman's claim for discrimination 'because of her association with disability' last week. It has now been reported that a decision has been delayed until January 2008. 

Maternity/additional paternity leave and pay - delay until April 2010

As noted in earlier updates, the Government had intended to extend Statutory Maternity Pay, Maternity Allowance and Statutory Adoption Pay from 39 weeks to 52 weeks and to introduce Additional Paternity Leave and Pay by the end of this Parliament.

These plans have now been put back. HM Revenue & Customs has stated that it has, up to now, been planning on the basis of implementation for babies due on or after April 2009 and that it "will now start planning implementation for babies due on or after April 2010" (although, once again, no firm timing decisions have been taken).

Pensions and flexible retirement

On 1 October 2007, the Department for Work and Pensions (DWP) published a consultation document on flexible retirement and pension provision, seeking comments on a number of questions that have come to light since the pensions provisions of the anti-age discrimination regulations came into force on 1 December 2006. 

The DWP acknowledges that employers and bodies from the pensions industry have raised concerns over two main areas:

• The relationship between the regulations and the increasing wish among employers to allow employees flexibility in their work as they near retirement. 
• The provision of death benefits under a pension scheme beyond the scheme's normal retirement age (NRA).

The DWP is aware that, in the absence of further guidance, there is uncertainty in the pensions industry and amongst employers over what could constitute age discrimination in relation to flexible retirement and pension provision. It is aiming to understand employers' practices in this area, and is seeking clarification of employers' views on the interaction of a scheme's NRA, the state default retirement age and any earlier age, before the scheme's NRA, at which pension scheme members may begin to draw their pension.

In relation to the issue of death benefits, the DWP highlights its policy intention on insurance, i.e. that such cover should be provided for pension scheme members where they continue in employment after NRA.  However, it has requested employers' comments on this and on objective justification if employers cease to provide cover in such circumstances. The consultation will close on 7 December 2007.

Agency workers' entitlement to SSP

According to HM Revenue & Customs, the DWP will be taking steps to amend the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002, in order to restore the Government's policy intention that agency workers with contracts of less than 3 months should not be excluded from entitlement to Statutory Sick Pay. HM Revenue & Customs have stated that preparatory work to amend the Regulations will take place during the coming months.

Lower data protection awareness amongst small businesses

Small businesses have a much lower awareness of the principles of the Data Protection Act than larger organisations, according to new research commissioned by the Information Commissioner's Office (ICO).

To help small businesses understand their obligations under the Act the Information Commissioner has launched additional guidance aimed specifically at the sector. The guidance provides a basic training framework to help staff understand their data protection requirements, such as keeping personal information secure, disclosing customer information over the telephone and handling requests from individuals for their personal information.