A defence available to employers accused of unlawful discrimination is that it was to avoid being in contravention of a statute. In London Fire Commissioner v Sargeant and ors, however, the Employment Appeal Tribunal (EAT) held that this defence was not available to the employer as they were obliged by the terms of the scheme not to discriminate.
Basic facts
When a new pension scheme was introduced for firefighters in 2015, members of the existing scheme who were born on or after 2 April 1971, were transferred over to it and tapering measures were introduced for those born between 2 April 1967 and 1 April 1971 inclusive.
Thousands of firefighters brought claims of age discrimination under the Equality Act on the basis that the terms of the 2015 scheme were less favourable than the old scheme. Those transferred compared themselves with firefighters who were born on or before 1 April 1967 who were allowed to remain members of the old scheme until their retirement.
Their employers – local Fire and Rescue Authorities (FRAs) - argued that they were acting “in pursuant to a requirement of an enactment” under paragraph 1(1) of Schedule 22 of the Equality Act and as the new scheme had been introduced under legislation by central government over which they had no control, they could not be in breach of the Act. The firefighters argued that if the paragraph had that effect, it must be contrary to the Equal Treatment Directive (ETD) and had to be disapplied.
Relevant law
Section 61(1) of the Equality Act states that an occupational pension scheme must be taken to include a non-discrimination rule.
Section 61(2)(a) provides that a non-discrimination rule is a provision by virtue of which a responsible person (such as a trustee or manager of a scheme) must not discriminate against another person when carrying out their functions under the scheme.
Section 61(3) states that the provisions of an occupational pension scheme have effect subject to the non-discrimination rule.
Section 62 gives the power to managers or trustees of a scheme the power to alter the rules to give effect to section 61(3).
Tribunal decision
The tribunal held firstly that section 61 must be construed so as to give effect to the ETD. As a non-discrimination rule had been inserted into the new scheme by section 61(1) and a duty imposed on the manager of the scheme not to discriminate in carrying out any of their functions under section 61(2), it followed that they were required to give effect to that provision unless paragraph 1(1) of Schedule 22 of the Equality Act required them to act otherwise.
It also held that paragraph 1(1) must not be construed in such a way so as to exclude claims about terms and conditions set out in the subordinate legislation as this would jeopardise the objectives of the directive. It then went on to hold that even if paragraph 1 did bar an age discrimination claim under section 61 the firefighters were - because the fire service is an emanation of the state - entitled to rely on their rights under the directive.
EAT decision
Dismissing an appeal by the employers, the EAT held that the FRAs were obliged not to discriminate against the firefighters on the ground of age under section 61. That obligation took priority over the discriminatory provisions in the pension scheme, an approach which gave effect to their obligations under the ETD.
Far from being obliged to discriminate against the firefighter claimants “pursuant to a requirement specified in an enactment”, they were obliged by the terms of the scheme not to discriminate against them.
Finally, as the FRAs were the scheme managers, they had the power under section 62 to pass a resolution making non-discrimination alterations to the scheme which they had patently failed to do.
Comment
This case confirmed that the non-discriminatory rule prevails and the scheme was to be read as if the discriminatory provision – including discriminatory pension scheme rules contained in legislation - did not apply. Scheme rules must be read as including the non-discrimination rule in section 61 and there is no defence available to a pension scheme manager facing a discrimination claim by a pension scheme member that the discrimination is a statutory requirement.