Rutherford & Anor v Secretary Of State For Trade & Industry [2004] EWCA Civ 1186

Case No A1/2003/2224[2004] EWCA Civ 1186
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
MR JUSTICE WALL
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Friday, 3 September 2004
Before
LORD JUSTICE POTTERLORD JUSTICE MUMMERYLORD JUSTICE SCOTT BAKER
Between
MR JOHN RUTHERFORD & ANORAppellantsSECRETARY OF STATE FOR TRADE & INDUSTRYRespondent
(Transcript of the Handed Down Judgment ofSmith Bernal Wordwave Limited, 190 Fleet StreetLondon EC4A 2AGTel No: 020 7421 4040, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
MR ROBIN ALLEN QC MS RACHEL CRASNOW and MR PAUL TROOP (instructed by Charles Russell and Islington Law Centre) for AppellantsMR DAVID PANNICK QC MRS MELANIE HALL QC and MS KASSIE SMITH (instructed by The Treasury Solicitor) for Respondent
Judgment

Introduction

[1]In form these are commonplace claims for unfair dismissal and redundancy pay brought in the employment tribunal by two elderly male employees. In substance they are complaints of indirect sex discrimination in access to the benefits of basic employment rights. The ambitious aim of the two test actions is to secure judicial disapplication of long standing statutory limitations on the jurisdiction of the employment tribunal.[2]The charge of indirect sex discrimination is founded on the upper age limit (in these cases 65) imposed by Parliament for both men and women on access to the relevant rights. The issue is whether the age limit is indirectly discriminatory of men and therefore incompatible with European Community law on equal pay. In order to avoid any misunderstanding it should be stated at the outset that the issue is not one of(a) direct sex discrimination; or(b) age discrimination; or(c) discriminatory conduct for which an employer is directly or vicariously liable. The target is the alleged discriminatory effect of the legislation itself, as was the case in R v. Secretary of State for Employment Ex p Equal Opportunities Commission [1995] 1 AC 1.[3]Although there is quite a simple answer to the indirect discrimination point, it has become virtually impossible and almost unacceptable to decide points of this kind in short form. The legal materials on indirect discrimination and equal pay are increasingly voluminous and incredibly intractable. The available arguments have become more convoluted, while continuing to multiply. Separating the wheat from the chaff takes more and more time. The short snappy decisions of the early days of the industrial tribunals have long since disappeared. They have been replaced by what truly are “extended reasons” which have to grapple with factual situations of escalating complexity and with thicker seams of domestic and EC law, as interpreted in cascades of case law from the House of Lords and the European Court of Justice.[4]It will come as no surprise to those familiar with these developments to learn that five years after they were started these cases are still stuck at the most preliminary stage of litigation: establishing the jurisdiction of the tribunal to hear the claims. There have been two substantive hearings in the employment tribunal (sitting at London East). The second hearing lasted for 10 days in June and July 2002. There have been two full hearings in the employment appeal tribunal. The first judgment given by Lindsay J on 10 July 2001 is reported as Harvest Town Circle Ltd v. Rutherford at [2002] ICR 123 (Rutherford 1). It is no criticism of the second judgment of the employment appeal tribunal, from which these appeals have been brought, to describe it as monumental. It is 100 pages long. It has 226 paragraphs. The explanation for being an “extremely long” decision is supplied in paragraphs 4 and 5 of the appeal tribunal judgment. It is, as one would expect, a comprehensive document, which will be a valuable reference work for use in future cases for years to come. It explicitly sets out to examine all the relevant statutory material and all the case law, domestic and EC, as well as the very full arguments addressed by two leading practitioners in this field on the evidence and the law relating to the two basic issues on the law of indirect discrimination: disparate adverse impact and objective justification.

Unfair dismissal and redundancy pay

[5]The right of an employee under s 94(1) Employment Rights Act 1996 (ERA) not to be unfairly dismissed by his employer and the right of an employee to a redundancy payment under s135 ERA are subject to qualifying periods of service and to specific exclusions. Prior to 1 June 1999 the qualifying period for unfair dismissal was 2 years. Since then it has been 1 year. The qualifying period for redundancy pay remains at two years continuous service. This appeal is concerned with exclusions in the form of the imposition of an upper age limit on bringing claims for unfair dismissal and redundancy pay. Over 65’s in the same position as the two applicants, whether they are male or female employees, are barred from access to compensation for unfair dismissal and to redundancy pay.[6]Section 109 ERA provides:
“(1) Section 94 does not apply to the dismissal of an employee if on or before the effective date of termination he has attained- (a) in a case where- (i) in the undertaking in which the employee was employed there was a normal retiring age for an employee holding the position held by the employee, and (ii) the age was the same whether the employee holding that position was a man or a woman, that normal retiring age, and (b) in any other case, the age of sixty-five.” (a) in a case where- (i) in the undertaking in which the employee was employed there was a normal retiring age for an employee holding the position held by the employee, and (ii) the age was the same whether the employee holding that position was a man or a woman, that normal retiring age, and (b) in any other case, the age of sixty-five.”
[7]There is a similar exclusion in s 156(1)(b) ERA in the case of a claim for a redundancy payment. These cases are concerned with the default provision, which specifies 65 as the upper age limit in default of a “normal retiring age” set by the employer for both men and women in the relevant undertaking.

The claims

[8]Both applicants exceeded the default age limit of 65 at the time of their dismissals. There was no “normal retiring age” in either of the relevant undertakings in which the applicants were employed. The first case is a claim for unfair dismissal and redundancy pay by the appellant Mr John Rutherford. He was dismissed by Harvest Town Circle Ltd in September 1998 at the age of 67. Harvest Town passed a winding up resolution on 27 February 2001 and is insolvent. The second case is a claim for redundancy pay and wages by the other appellant, Mr Samuel Bentley, who was dismissed by Bodner Elem Ltd on 9 February 2001 at the age of 73. Bodner Elem was put into administrative receivership at the time of Mr Bentley’s dismissal and is insolvent. As explained later, the insolvency of Mr Rutherford’s and Mr Bentley’s employers has led to the joinder of the Secretary of State for Trade and Industry as a party. Tribunal decisions[9]The employment tribunal has twice held (in extended reasons promulgated first on 16 July 1999 and secondly on 22 August 2002) that it has jurisdiction to hear the two originating applications, despite the fact that each applicant was over 65 at the time of his dismissal. It held that the imposition of the upper age limit, although now expressed to be the same for both men and women employees (it was previously 60 for women, but was amended to be the same as for men following the ruling of the Court of Justice in Marshall v. Southampton and SW Hampshire Health Authority [1986] ICR 335), had a greater adverse impact on men than on women. The tribunal held that the exclusions were indirectly discriminatory of men. They were incompatible with the directly effective principle in Article 141(ex Article 119) of the Treaty of Rome of “equal pay for male and female workers for equal work or work of equal value” (i.e. equal pay without discrimination based on sex). They were not objectively justifiable. The tribunal accordingly disapplied the statutory default age limits on claims for unfair dismissal and redundancy pay and held that it had jurisdiction to entertain the claims.[10]On 2 October 2003 the employment appeal tribunal allowed the appeal by the Secretary of State, set aside the second decision of the employment tribunal and dismissed the claims of Mr Rutherford and Mr Bentley. (The first employment tribunal decision had been set aside by the employment appeal tribunal on 10 July 2001 and the matter remitted for re-hearing by the employment tribunal). The applicants now appeal to this court contending that the decision of the employment tribunal did not contain any error of law entitling the appeal tribunal to overturn its decision.

Common ground

[11]Many aspects of the cases under appeal are not in dispute:(1) The claims for unfair dismissal and redundancy are made under the ERA. They are not claims for sex discrimination under the Sex Discrimination Act 1975 nor are they claims for age discrimination.(2) The cases on the interpretation of the principle of equal pay without discrimination based on sex in Article 141 and its predecessor (Article 119) establish that (a) “pay” includes compensation for unfair dismissal and redundancy payments; (b) the principle applies to cases of indirect, as well as direct, discrimination; and (c) indirect discrimination, unlike direct discrimination, may be objectively justifiable by factors unrelated to grounds of sex. (The legal position was summarised by Lindsay J in paragraph 5 of Rutherford 1, which is cited in paragraph 24 of the judgment of the employment appeal tribunal.)(3) Article 141 does not define the test for determining indirect discrimination. There is no decision of the European Court of Justice or of the English Courts on the precise issue at the heart of this case: how to define the relevant pool of employees for the purposes of determining whether there is indirect discrimination by the disparate (or disproportionate) adverse impact of an age- related provision, as contained in s 109 and s156 ERA.(4) General principles on the primary issues of (a) the definition of the relevant pool and (b) objective justification were laid down in R v. Secretary of State ex p Seymour Smith [1999] ICR 447 (ECJ) and (No 2) [2000] ICR244 (House of Lords), although there is a dispute about their application to the facts of these cases. Extensive reference was also made in the tribunals below and in argument on this appeal to the guidance in the decision of the employment appeal tribunal in Rutherford No 1.(5) Neither party suggested below or in this court that it was necessary, in order to decide this case, to refer to the Court of Justice a question of the interpretation of Article 141.(6) The involvement of the Secretary of State in the proceedings is the result of the insolvency of the employer of Mr Rutherford (Harvest Town Circle Limited) and the employer of Mr Bentley (Bodner Elem Limited) and the potential statutory liability of the Secretary of State to meet the claims of the employees of insolvent employers for redundancy pay under ss 166 and 167 ERA and for the basic award of compensation for unfair dismissal under Part XII ERA. A. Assessment of disparate adverse impact[12]The applicants won on this critical point in the employment tribunal, but lost it in the employment appeal tribunal. In the assessment of the disparate adverse impact of the upper age limit on male and female employees a great deal turns on how the relevant pool is defined: whether it is by reference to the entire workforce or only by reference to part and, if so, what part. The assessment differs significantly according to how the tribunal defines the pool within which the disparate impact is to be assessed. Should it be defined, as the applicants contend, only by reference to those who are or might be adversely affected (disadvantaged) by the upper age limit, because they are, or might be, unable to comply with the requirement of being under 65 at the relevant time? Or should it be defined, as the Secretary of State contends, by reference to a wider pool embracing all employees in the work force to whom the age limit applies, including all those who are not adversely affected (i.e. advantaged) by the upper age limit, because they are able to comply with the requirement of being under the age of 65 at the relevant time?[13]In order to assess the disparate impact of the upper age limit of 65 the employment tribunal received statistical evidence from experts called by each side, Professor Elias for the applicants and Dr Hotopp for the Secretary of State. Reference was made to the Labour Force Survey figures for Great Britain. The evidence showed how many men and how many women there were in various age groups of people in the workforce. There were differing views as to whether the workforce should be confined to employees who were qualified by their periods of service to make claims, or whether it should extend to all employees, including even those who were not working, but were looking for work and wished to work. At the end of the day those disagreements are of little significance on the available statistical evidence. The critical question is whether the relevant pool should be defined primarily by reference to those who were advantaged or, as the employment tribunal held, by reference to those who were or might be disadvantaged by the age limit.[14]In determining disparate adverse impact at the respective dates of dismissal of the claimants (1998 and 2001) the employment tribunal accepted the applicants’ submission that the relevant pool of the working population should be defined by reference to statistics relating only to those persons whom, in its view, were or might be disadvantaged by the 65 years age limit. It was submitted by Mr Robin Allen QC for the applicants that the proper perspective for deciding whether a disputed provision was indirectly discriminatory was to consider the position of those disadvantaged by it. The exclusionary provision only hits at those who are disadvantaged. They are the correct group on which to focus in order to achieve a balanced common sense conclusion. He submitted that that approach was in accordance with the guidance given to the employment tribunal by the appeal tribunal in Rutherford 1.

Decision of employment tribunal

[15]The employment tribunal rejected the Secretary of State’s contentions that the focus should be on the advantaged group, who were able to satisfy the requirement to be under 65 at the relevant time and that it was relevant to focus on those in the workforce between 16 and 79 who had qualifying service, which would enable them to make claims for unfair dismissal or redundancy pay. In the indirect discrimination provisions of the sex and race discrimination legislation, which refer to the proportions of those who “can comply” with the disputed requirement or condition, the focus is on the advantaged group. On that approach there was no real difference between the proportion of male workers who could satisfy the requirement to be under 65 at the relevant time (98.79% in 1998 and 98.88% in 2001) and the proportion of female workers who could satisfy the requirement to be under 65 at the relevant time (98.69% for 1998 and 99.01% for 2001). (1998 was the year of Mr Rutherford’s dismissal. 2001 was the year of Mr Bentley’s dismissal.)[16]The proportions of men and women who could satisfy the requirement to be under 65 at the relevant time were still very much the same even when the statistics related to the expanded pool of the entire workforce aged between 16 and 79, rather than to those with qualifying periods of service: for male workers the proportions were 98.59% for 1998 and 98.64% for 2001;and for female workers the proportions were 99.01% for 1998 and 99.11% for 2001.[17]The employment tribunal’s comment on the Secretary of State’s approach, in the lengthy crucial paragraph of its decision on this point, was that her “figures” (i.e. the above comparative %’s) were not “relevant” to its consideration:
“16. …for various reasons already stated we do not think that these statistics and this breakdown throws up relevant figures for us to consider.”
[18]Instead, the employment tribunal preferred the applicants’ approach and focused only on the statistical evidence relating to the disadvantaged group, consisting of individuals in a number of different age bands(a) between 55 and 64;(b) between 65 to 74; and(c) a combination of the two groups, making a group of those between 55 and 74. The focus of the pool on the age range between 55 and 74 was treated as relevant because the applicants asserted and the employment tribunal agreed that retirement by 65 has “some real meaning” for people in those age ranges. That was the starting point for the comparison. The comparison then made between the men and women in the 55-74 pool showed a “substantially higher” proportion of disadvantaged men than disadvantaged women, who were unable to satisfy the upper age limit requirement. The employment tribunal concluded (in a passage immediately following the passage quoted in paragraph 17 above) “16. ….Looking now at what we consider to be the relevant statistics and standing back from the detail and forming an overall view, we are convinced that both in 1998 and 2001 the relevant legislative measures disadvantaged a substantially higher proportion of males than females. In forming this conclusion we have considered the numbers, the percentages, the percentage point differences and especially the ratios, not only for the years in question but also for previous years. ” Decision of employment appeal tribunal[19]The Secretary of State successfully appealed to the employment appeal tribunal on the approach to the assessment of disparate adverse impact. It was held that the employment tribunal had erred in law in its approach, as it had wrongly selected and defined the relevant pool. It had confined the pool too narrowly to the extent of excluding the relevant pool from its consideration. It had wrongly confined the pool to a relatively small number of men and women, whom it regarded as disadvantaged by the age limit (i.e. those in the age bands between 55 and 74), instead of taking the entire workforce between 16 and 79. The proportions of persons in the disadvantaged group so defined is small and insignificant compared with those in the advantaged group (i.e. those under 65). The employment tribunal had ignored the application of the age limit to the advantaged group, being all those who were not excluded by the upper age limit (i.e. all persons under 65 in the entire workforce.) The correct approach was to include the entire workforce in the pool. The upper age limit applied to and affected all those persons, including all employees and potential employees seeking work. It would affect the right that all of them had to obtain access to claims for unfair dismissal and redundancy pay.[20]Within the pool of the entire workforce a comparison between the proportion of men and women in the advantaged group (i.e. those under 65) revealed that the proportions of men and women who could satisfy the criterion of being under the age of 65 were almost exactly the same. On that approach the imposition of the default age limit had no disparate adverse impact as between men and women. The Seymour Smith judgments[21]I agree with the employment appeal tribunal that the correct pool depends on the proper understanding and application of the legal principles laid down by the ECJ and the House of Lords in R v.Secretary of State for Employment Ex parteSeymour-Smith. One of the questions referred by the House of Lords to the Court of Justice was the legal test for establishing whether a state measure indirectly discriminated against women on the ground of sex contrary to Article 119.[22]In the ECJ [1999] ICR 447 the interpretation of Article 119 and the role of the national court on the question of indirect discrimination were considered in the context of a challenge to the compatibility with the equal pay principle of the requirement of domestic law that an applicant claiming unfair dismissal should satisfy a qualifying period of two years continuous service. That was a requirement which affected all employees, regardless of their age.[23]It was submitted by Mr Allen that this case was different in that the focus of the upper age limit was on retirement, either at a date fixed by the employer or, in default of that, at the default date of 65 fixed by Parliament. It was therefore logical, he submitted, for the tribunal, in determining the relevant pool, to take into consideration the fact that, for younger employees, retirement was not as relevant as for those in the age bands closer to the default age of 65. I agree that the issues in this case and in Seymour-Smith arose in different contexts, but, in my judgment, that does not affect the validity and the applicability of the general approach to indirect sex discrimination laid down in Seymour-Smith.[24]In Seymour-Smith the Court of

Justice said at p 490:

“58. As regards the establishment of indirect discrimination, the first question is whether a measure such as the rule at issue has a more unfavourable impact on women than on men. 59. Next, as the United Kingdom Government was right to point out, the best approach to the comparison of statistics is to consider, on the one hand, the respective proportions of men in the workforce able to satisfy the requirement of two years’ employment under the disputed rule and of those unable to do so, and, on the other hand, to compare those proportions as regards women in the workforce. It is not sufficient to consider the number of persons affected, since that depends on the number of working people in the Member State as a whole as well as the percentages of men and women employed in that State. 60. As the court has stated on several occasions, it must be ascertained whether the statistics available indicate that a considerably smaller percentage of women than men is able to satisfy the condition of two years’ employment required by the disputed rule. The situation would be evidence of apparent sex discrimination unless the disputed rule were justified by objective factors unrelated to any discrimination based on sex. 61. That could also be the case if the statistical evidence revealed a lesser but persistent and relatively constant disparity over a long period between men and women who satisfy the requirement of two years’ employment. It would, however, be for the national court to determine the conclusions to be drawn from such statistics. 62. It is also for the national court to assess whether the statistics concerning the situation of the workforce are valid and can be taken into account, that is to say, whether they cover enough individuals, whether they illustrate purely fortuitous or short term phenomena, and whether, in general, they appear to be significant…... 63. In this case, it appears from the order for reference that in 1985, the year in which the requirement of two years’ employment was introduced, 77.4% of men and 68.9% of women fulfilled that condition. 64. Such statistics do not appear, on the face of it, to show that a considerably smaller percentage of women then men is able to fulfil the requirement imposed by the disputed rule.”
[25]My reading of the passage cited, as applied to this case, is that, in general, the relevant statistical comparison involves(a) taking as the pool “the workforce” (i.e. the entire workforce) to whom the age limit is applicable, not taking just a small section of the workforce, confined to those who are adversely affected by being over 65 or within 10 years of the age of 65;(b) ascertaining the proportion of men in the workforce who are under the age of 65 and are advantaged by being able to meet the requirement, and the proportion of men who are excluded from the right and are therefore disadvantaged by being unable to meet the requirement;(c) ascertaining the proportion of women in the workforce who are under the age of 65 and are therefore advantaged by being able to meet the requirement, and the proportion of women who are excluded from the right and are therefore disadvantaged by being unable to meet the requirement;(d) comparing the results for men with the results for women in order to see whether the percentage (not the numbers) of men in the workforce who are advantaged is considerably smaller than the percentage of women who are advantaged. The primary focus is on the proportions of men and women who can comply with the requirement of the disputed rule. Only if the statistical comparison establishes a considerable disparity of impact, must the court then consider whether the disparity is objectively justifiable.[26]It is also necessary to refer to the speeches in the House of Lords in Seymour-Smith (No 2) [2000] ICR 244. The House considered the application of the ruling of the Court of Justice on the interpretation of the equal pay Article. Argument in this court centred on the speech of Lord Nicholls. He discussed the point of disparate adverse impact in more detail than the other members of the Appellate Committee and he was in the majority. In his discussion of the ruling of the Court of Justice and its treatment of the statistics he pointed out that the Court of Justice in fact focused exclusively in its judgment on the statistics as at the date when the extended qualifying requirement was introduced (1985) and on a comparison of the percentages of men and women who were able to satisfy that qualifying period. Lord Nicholls made a similar comparison of the percentages available for 1991, which was agreed by the parties to be the relevant date, and concluded (at p 259A) that the ratio of men and women who qualified (roughly 10:9) demonstrated that the extension of the qualifying period had a “considerably greater adverse impact on women than men.”[27]Commenting on the approach to the comparison of statistics referred to in paragraph 59 of the judgment of the Court of Justice, Lord Nicholls said at p259F-260A:
“This statement appears to envisage that two comparisons should be made: 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”). Thereafter in its judgment the court considered only the proportions of men and women who were qualifiers. Some of the ramifications involved in looking at the composition of thedisadvantaged group, as well as the composition of the advantaged group, were explored by the Divisional Court and the Court of Appeal in the present case. Suffice it to say, I do not understand the Court of Justice to have rejected use of the figures relating to the non-qualifiers in a suitable case. Indeed, the European Court has looked at the composition of the disadvantaged group in several cases, although in none of them was there an issue on this point…Having come to the conclusion I have expressed above on the issue of disparate impact, it is unnecessary to reach a firm conclusion on this point. I prefer to leave the question open for another occasion.”
[28]While leaving open the question whether the proportions in the disadvantaged group, as well as in the advantaged group, should be considered, Lord Nicholls did not suggest that it was correct to consider only the proportions in the disadvantaged group, as was done by the employment tribunal in this case. Indeed, as was pointed out in the Divisional Court in Seymour Smith [1995] ICR 889 at 904F-H and 914F-G, concentration on the proportions of men and women in the workforce, who are disadvantaged because they cannot comply with a disputed requirement, can produce seriously misleading results, as in the simple case of a requirement with which 99.5% of men can comply and 99% of women can comply. If the focus is then shifted to the proportions of men and women who cannot comply (i.e. 1% of women and 0.5% of men), the result would be that twice as many women as men cannot comply with the requirement. That would not be a sound or sensible basis for holding that the disputed requirement, with which the vast majority of both men and women can comply, had a disparate adverse impact on women.

Conclusion

[29]In my judgment, the employment tribunal erred in law, as it failed to adopt the approach to disparate adverse impact laid down in Seymour-Smith. Itshould have taken the statistics for the entire workforce, to which the unfair dismissal and redundancy pay requirement of being under 65 applied. It should then have primarily compared the respective proportions of men and women who could satisfy that requirement. It should not have defined and distorted the relevant pool by excluding the “figures” relied on by the Secretary of State as not relevant for it to consider and by referring only to those who were disadvantaged by the disputed upper age limit requirement. In brief, the employment tribunal erred in regarding as irrelevant to its consideration the figures relied on by the Secretary of State relating to those in the workforce who could comply with the age requirement. If the correct approach is taken, the statistics in evidence clearly establish that the difference in the working population between the proportion of men aged under 65 who can comply and the proportion of women aged under 65 who can comply is very small indeed. The disparities are certainly not “considerable” in the sense required by Seymour-Smith.[30]Instead, and in error, the employment tribunal treated the statistics concerning the advantaged group as irrelevant to its consideration of the disparate adverse impact point. It appears from paragraph 16 of the extended reasons that the tribunal focused on and made comparisons by reference to very small pools of persons who were disadvantaged by being unable to satisfy the requirement of the right or were approaching the age when they would be disadvantaged.In concentrating exclusively on the statistics for those who cannot comply and on the older members of the workforce, for whom it was thought that retirement has “a real meaning”, instead of on the entire workforce and primarily on those in it who can comply with the requirement, the tribunal reduced the size of the pool and thereby departed from the approach laid down in Seymour Smith and in the line of Court of Appeal cases leading up to Seymour Smith: see, for example, University of Manchester v. Jones [1993] ICR 474 at 493H-494B, 495A-C, 495G-496A, 501A-E and G-H, 502B-D and 506A-B and F-H; London Underground v. Edwards [1995] ICR 574 (EAT) and (No 2) [1999] ICR 494 (CA) at 496H-497A and 505C-G. The guidance given by the employment appeal tribunal in Rutherford 1 did not, in my judgment, require the employment tribunal to take the course it did. The Burden of Proof Directive[31]Mr Robin Allen QC submitted that the Burden of Proof Directive (97/80/EC), which was published on 20 January 1998 and was extended to the United Kingdom on 13 July 1998 (Directive 98/52/EC) required the primary or predominant relevant focus to be on the disadvantaged group, rather than on those who are advantaged, and that the judgments in SeymourSmith must be read subject to the Directive, which provides in Article 2:
“(1) For the purposes of this Directive, the principle of equal treatment shall mean that there shall be no discrimination whatsoever based on sex, either directly or indirectly. (2) For purposes of the principle of equal treatment referred to in paragraph 1, indirect discrimination shall exist where an apparently neutral provision, criterion or practice disadvantages a substantially higher proportion of the members of one sex unless that provision, criterion or practice is appropriate and necessary and can be justified by objective factors unrelated to sex.”
[32]Article 3 of the Directive provides that it applies to situations covered by Article 119 (now Article 141 of the Treaty).[33]Both applicants were dismissed after the Directive came into force in the UK on 13 July 1998, although the Directive was not implemented until, with effect from 12 October 2001, amendments were made to the Sex Discrimination Act 1975 by the Burden of Proof Regulations 2001 (SI No 2660.)[34]Mr Allen submitted that if, as was argued on behalf of the Secretary of State, Seymour Smith required the tribunal to consider the advantaged or qualifying group, it was inconsistent with the Directive and was no longer correct. Seymour–Smith was decided by reference to the law at the date of the relevant dismissal (1991), although the judgments of the Court of Justice was given after the publication of the Directive (9 February 1999).Mr Allen submitted that it was the duty of the tribunal and of this court to construe Article 141 to be consistent with the provisions of the Directive. That meant that the focus should be on the disadvantaged group.[35]I do not read the Directive as having the far-reaching effects on Seymour-Smith or on this case for which Mr Allen contends. The definition of indirect sex discrimination in Article 2 of the Directive focuses on an apparently neutral provision, which has unjustified disadvantages for a substantially higher proportion of the members of one sex. The definition describes when a certain state of affairs (i.e. indirect discrimination) exists: it does not, however, prescribe the methodology for assessing the statistical evidence in order to determine whether or not that state of affairs exists. No methodology has been laid down in the Treaty or in any directive or in national legislation. It has been left to the national courts and tribunals, which hear and assess the evidence and find the facts, to work out from case to case a satisfactory method for assessing whether or not there is disparate adverse impact in the particular case. It is a matter of applying considerations of logic, relevance and common sense to the raw material of the statistical evidence in order to determine the existence or otherwise of the objectionable state of affairs. B. Objective Justification[36]As the imposition of the upper age limit of 65 does not, in my judgment, have a disparate adverse impact on men, the question of objective justification does not arise for decision. The court has, however, heard full submissions on the point and there are some aspects of the point on which I wish to comment.[37]It is common ground that it is for the Secretary of State to show that the exclusion by the imposition of the upper age limit of 65 was objectively justified. As Lord Nicholls said in Seymour Smith [2000] ICR 244 at 260F-H “ The onus is on the Member State to show(1) that the allegedly discriminatory rule reflects a legitimate aim of its social policy,(2) that this aim is unrelated to any discrimination based on sex, and(3) that the Member State could reasonably consider that the means chosen were suitable for attaining that aim.” (reflecting the judgment of the Court of Justice [1999] ICR 447 at 492 paragraph 77).[38]Lord Nicholls pointed out that the Court of Justice had allowed governments proceeding in good faith a “broad measure of discretion” in choosing the method to achieve a legitimate social policy aim.[39]The employment tribunal rejected the defence of objective justification on the ground that the age requirement was “tainted with sex discrimination.” The aim of the social policy in setting the upper age limit was discrimination based on sex as the upper age limit was “inextricably linked” with the different State pension ages for men (65) and women (60). Those were also the age limits originally set for unfair dismissal and redundancy payments, but they were amended, so as to set the same upper age limit (65) for men and women following the decision of the Court of Justice in Marshall v. Southampton Area Health Authority [1986] ICR 335 that it was contrary to EC equal treatment law to require women to retire at 60 and men at 65. The different ages for State pensions continue for the time being.[40]The tribunal concluded that the amendments made to equalise the upper age limit for men and women for unfair dismissal and redundancy payments “did not alter this link.” Unlike a woman, a man unfairly dismissed between the ages of 60 and 65 cannot draw on his State pension. The justification relied upon was thus still inextricably linked with sex discrimination.[41]I agree with the employment appeal tribunal that this approach to objective justification was not that laid down in Seymour Smith. It was erroneous in law. Following the equalisation at 65 of the upper age limit for men and women claiming unfair dismissal and redundancy pay, there is no sex discrimination in the age limits themselves. The differing State pension ages are irrelevant to objective justification. It is irrelevant to justification of the same upper age limit for men and women in cases of unfair dismissal and redundancy claims that women are entitled to draw on a State pension, if they are unfairly dismissed between the ages of 60 and 65, whereas men are not so entitled. The difference in the State pension ages for men and women is not the matter about which the applicants were complaining. There is, in any event, lawful sex discrimination in favour of women in the matter of State pensions by reason of the Social Security Directive (EC/79/7) of 19 December 1978 until equalisation is achieved in 2020. As to the matter on which they were complaining (unfair dismissal and redundancy), the age limit of 65 is the same for men and women. It is not therefore a factor tainted by sex discrimination.[42]As a result of taking the wrong approach to objective justification, the employment tribunal did not properly address the question whether the Secretary of State had identified one or more legitimate social policy aims in setting the upper age limit and whether the Government could reasonably consider that the age limit of 65 was reasonably suitable for attaining the social policy aims.[43]It was submitted on behalf of the Secretary of State that the tribunal ought to have concluded that one or more of the aims was a legitimate aim of social policy, which was not tainted by sex discrimination and that the government could reasonably consider that the age limit of 65 was reasonably suitable for attaining the social policy aims. In my judgment, these are matters for the employment tribunal to try and to decide, and not for the employment appeal tribunal or for this court to re-try. If disparate adverse impact had been established, it would, in my judgment, have been necessary to remit the issue of objective justification for determination by the employment tribunal in accordance with the evidence and the law. It would be for the employment tribunal to decide the issue of objective justification, including the question whether Parliament was entitled to state a default age of 65 when the employer can choose to impose a different maximum age, if it pleases.[44]I shall not therefore express a view on the rival arguments advanced by each side on the issue of objective justification. I should, however, comment on the employment tribunal’s general attitude to the form of the evidence put before it by the Secretary of State. The point might well arise in future cases. The employment tribunal was specifically criticised on this point by the employment appeal tribunal.[45]The government’s evidence was contained in witness statements of Mr Stephen Walker and of Mr Charles Phillips. They were Assistant Directors in employment rights and employment relations matters in the Department of Trade and Industry. In his statement, for example, Mr Phillips stated that, in relation to unfair dismissal as at 1998, when Mr Rutherford was dismissed, three social policy aims were advanced by the upper age limit of 65: enabling employers to meet the expectations of younger employees for advancement; assisting employers to identify their future recruitment needs; and enabling employers to dismiss an older and less capable employee without the need to justify the dismissal. His statement also contended that by 2001, when Mr Bentley was dismissed, the continued existence of the age limit was also justified on the basis that the issue was to be addressed as part of the planned and systematic age related legislative changes required by 2006 in the light of EC Directive 2000/78 of 27 November 2000. Mr Walker also dealt with social policy aims for the age limit in the case of redundancy payments. Mr Phillips and Mr Walker stated that their witness statements were endorsed by a Minister in the Department.[46]The employment tribunal concluded that the Secretary of State was not entitled to rely on the evidence of the witness statements as explaining the justification for the upper age limit. It stated at paragraph 19 of the extended reasons that “…we conclude that [the endorsement of the Minister] is approval only of what they are stating and not that what they are stating is government policy.”[47]I do not agree with the tribunal’s conclusion. The statements of Mr Phillips and Mr Walker were the evidence of the Secretary of State. They explained the government’s position on the justification issue, which was to be considered, having regard to the broad discretion accorded to Member States on social policy aims. The witnesses were not expressing their own personal understanding of government policy on the justification issue. C. Result[48]I would dismiss the appeals on the disparate adverse impact point. The employment tribunal made an error of law in its treatment of the point by defining the relevant pool too narrowly and by excluding from its consideration those in the workforce who were able to comply with the disputed age limit. The employment appeal tribunal rightly set the decision aside and dismissed the claims. As the applicants have not established that, on the correct approach, there was any indirect sex discrimination against men in the imposition of the upper age limit of 65, there are no grounds for disapplying the relevant statutory provisions of the ERA and the question of objective justification does not arise for decision. The result of the application of the age limit in the relevant provisions of the ERA is that the employment tribunal has no jurisdiction to entertain the applicants’ claims for unfair dismissal and redundancy pay. The claims fail and must be dismissed. Lord Justice Scott Baker[49]I agree. Lord Justice Potter[50]I also agree. (Order does not form part of approved judgment)

Cited in 6 later judgments