Employment Update October 2008
Compulsory retirement at age 65 may be justified
The Advocate General of the European Court of Justice (ECJ) has provided his opinion in the “Heyday Challenge”, the case brought by Age Concern to challenge the legality of the Employment Equality (Age) Regulations 2006.
Heyday’s main challenge to the Regulations was to the provision allowing mandatory retirement at age 65. Heyday is arguing that compulsory retirement provisions are contrary to the Equal Treatment Framework Directive and therefore unlawful. Heyday is also arguing that the justification for direct discrimination should be more onerous than the justification for indirect justification.
The UK Government and employers will be relieved that the Advocate General disagreed with Heyday’s arguments.
The main points of his opinion were that:
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A rule allowing compulsory retirement at age 65 is capable of objective justification;
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Such a rule may be justified if it can be reasonably justified by reference to a legitimate aim relating to employment policy and the labour market, in the context of national law;
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The means of achieving such a legitimate aim must not be inappropriate or unnecessary;
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There is no major difference between the test for justification for direct and indirect discrimination;
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National law does not need to provide a list of potential treatments which may be justified.
It should be noted that the Advocate General’s opinion is not binding on the ECJ. The ECJ’s decision is expected in early 2009, and if the ECJ follows the AG’s opinion, it will be for the English High Court to decide if the Regulations satisfy the test of objective justification.
A spokesman for the Department of Business, Enterprise and Regulatory Reform has stated that, regardless of the ECJ’s decision, the default retirement age will be reviewed in 2011, and if it is no longer found to be necessary, it will be removed.
Bonus scheme discriminatory to female workers
Employers should be aware that pay schemes may not be discriminatory from the outset, however, if such schemes are not continually assessed, they may become discriminatory at a later date.
In Hartlepool Borough Council and Others v Dolphin and Others, the EAT held that a bonus scheme which encouraged productivity in primarily male filled roles, was discriminatory against female workers. The EAT found that the scheme had not been properly reviewed or assessed for effectiveness, and that there was no proof that the scheme promoted productivity.
The Equal Pay Act 1970 provides that men and women should receive equal pay for equal work. S.1(3) of the Act provides a defence where the employer can provide evidence that the difference in pay is due to a genuine material factor, not relating to gender.
The Employer in this case claimed that the bonus scheme related to productivity, and that productivity was the material factor which was not related to the sex of the employees. However, both the Tribunal and EAT found that the scheme did not actually effectively promote productivity.
Indirect Age Discrimination
The recent decision of the EAT in Rainbow v Milton Keynes Council held that advertising for a teacher in the first five years of their career constituted indirect age discrimination.
The Claimant was a 61 year old woman, with 34 years teaching experience. She was not shortlisted for the position. The Tribunal held that the Employer had made a decision that they would recruit somebody within their first 5 years of teaching. The woman was plainly in an age group disadvantaged by that decision because it was the true reason for her not being shortlisted. This is indirect discrimination under Regulation 3(1) of the Employment Equality (Age) Regulations 2006. A teacher over the age of 60 is likely to have more than 5 years’ teaching experience.
The Respondent argued that the criterion was justified on the basis of cost. However, there was no evidence produced that the school’s budgetary position for the year in question or subsequent years as to require a teacher within the first five years of experience. There was also no evidence of other types of financial strategy to achieve the same or similar results.
Employers recruiting staff in all industries need to be aware of the rules when advertising professional roles.
Increases in National Minimum Wage
On 1 October 2008 the hourly rates for the National Minimum Wage increased. The new rates are as follows:
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Adult rate: £5.73 (Previously £5.52)
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Development rate: £4.77 (Previously £4.60)
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Young workers rate: £3.53 (Previously £3.40)
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Accommodation offset rate: £4.46 (Previously £4.30)
EAT decision on time off for dependent care
In the recent case of Royal Bank of Scotland PLC v Harrison, the EAT agreed with the tribunal’s decision regarding time off for emergencies, under s.57A(1)(d) of the Employment Rights Act 1996. s.57A(1)(d) allows time off for parental care when it is “necessary because of the unexpected disruption or termination of arrangements for the care of a dependent.”
In this case it was held that knowledge that a childminder would be unavailable in 2 weeks time constituted an unexpected disruption under s.57A(1)(d). RBS tried to argue that two weeks of prior knowledge could not be “unexpected”.
The EAT considered the meaning of the words “necessary” and “unexpected”. They held that the term “unexpected” should be interpreted with its natural meaning, which does not involve a time element. The EAT said that the length of time the employee had knowledge could be a factor taken into account when considering if the employee’s time off was “necessary.”
The EAT said there was no fixed rules, and each case should be considered on its own merits.
Justification of Fixed Term Contracts
The EAT has held, in the case of Secretary of State for Schools and Families v Fletcher, that a rule limiting teachers contracts to nine years, could not be justified under the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002.
The decision will be relevant to construction workers and oil and gas workers who are often on fixed term contracts.
Regulation 8 of the Fixed-term Employees Regulations, provides that people on fixed-term contracts for a successive period of four years will automatically become permanent employees.
The European Schools are regulated by the 1994 Statute of the European Schools, which has the status of an EC Treaty. Article 29 of the European Schools’ Staff Regulations, provided that the total period of employment at a European School was limited to nine years. Mr Fletcher was employed on a series of fixed term contracts amounting to ten years. The Secretary of State argued that there was factual and legal justifications for the continued use of fixed term contracts. However, these arguments were rejected by the Tribunal, and it was held that Mr Fletcher was a permanent employee.
The EAT held that in order for the limitation to be justified, it must relate to a specific task or employment.
The EAT also held that the Framework Agreement on Fixed Term Work was made subsequent to the 1994 Statute of the European Schools, and therefore, where there is conflict, the Directive will override the 1994 Statute. In addition, the EAT held that the Staff Regulations did not form part of the 1994 Statute.
The EAT has given leave to appeal to the Court of Appeal.
Employers using fixed-term contracts should be aware that workers will automatically become permanent employees after 4 years of fixed-term contracts, and it will be difficult to justify further use of fixed-term contracts.
FOR FURTHER INFORMATION CONTACT: ALISON GOW