Secretary of State for Trade & Industry -v- Rutherford and anor

The law currently states that employees over the age of 65 do not have the right to claim unfair dismissal or redundancy pay.

The House of Lords has decided in Secretary of State for Trade & Industry -v- Rutherford and anor (IDS 805) that this provision does not constitute indirect discrimination against men.

What were the basic facts?

Mr Rutherford was dismissed in October 1998 when he was 67; Mr Bentley in 2001 when he was 73.

Both men wanted to bring claims for redundancy pay and Mr Rutherford wanted to claim unfair dismissal, but they were prevented by the statutory upper age limit in section 109 of the Employment Rights Act 1996.

They then argued that, as the age bar affected more men than women, it was indirectly discriminatory against them and contrary to Article 141 of the EC Treaty.

Although their employers subsequently went bust, the Secretary of State for Trade and Industry took over responsibility for their claims because any compensation awarded to them would have had to come out of the National Insurance Fund.

What did the lower courts decide?

The first question to consider was the alleged “disparate” impact of the age limit on men as opposed to women. But who should be compared to whom?

The employment tribunal decided to compare employees between the ages of 55 and 74, because they were the section of the workforce most likely to be disadvantaged by the upper age limit. This showed that substantially more men than women were affected by the provisions.

The employment appeal tribunal (EAT), on the other hand, said that the correct group (or “pool”) should be the whole workforce – people employed between the ages of 16 and 79 – as the upper age limit applied to all of them. This showed that there was no real difference. The Court of Appeal agreed with the EAT (see LELR 94).

What did the House of Lords decide?

In five different speeches, the House of Lords unanimously agreed that the upper age limit was not indirectly discriminatory against men. The problem was, however, as one of the judges acknowledged, that the five opinions do not make it “easy to extract from their opinions a single easily-stated principle”.

The most detailed judgement, however, identified two main issues that needed to be decided.

The first, said the judge, was straightforward in that “the relevant legislation applies generally to all employed persons on whom rights are conferred by the Employment Rights Act 1996. As a matter of general principle, therefore, the pool should be all those persons.”

The second identified the comparisons that should be made. This should be “a comparison of the proportions of men and women able to satisfy the requirement (‘the qualifiers’), and a comparison of the proportions of men and women unable to satisfy the requirement (‘the non-qualifiers’)”.

In other words, the courts should concentrate on the proportions of men and women who can satisfy the requirement laid down by the employer (or in this case, by statute). The judge termed this the “advantage-led” approach.

Three of the other law lords, however, argued that statistics were not relevant at all to the claim, and that the equal pay legislation just required a man over 65 to be treated in the same way as a woman in the same age group. As no one over 65 could claim unfair dismissal or redundancy pay, there could be no discrimination.

Comment

This case does not state any new principle of law, but simply confirms that employees (both men and women) have to be under 65 to get redundancy pay.

The issue of an upper age limit will be partly resolved by the age discrimination regulations coming into force on 1 October 2006.