Age discrimination – will your objective justifications stand up to scrutiny?
This case was brought by six high court judges but affected 210 judges at various levels within the judiciary. The claim was made against the Lord Chancellor and Secretary of State and the Ministry of Justice regarding changes to the affected judges’ pension scheme which were of a discriminatory nature.
The claimants were members of the judicial pension scheme (“JPS”) prior to 1 April 2016. This scheme was established under the Judicial Pensions and Retirement Act 1993 and was closed to accrual under the provisions of that act on 31 March 2015. As part of the closure exercise the benefits of serving judges were compulsorily transferred to a replacement scheme.
The replacement scheme provided less valuable benefits than the JPS, and whilst there were transitional provisions in place to reduce the impact on some of the transferring members, it transpired that may transferring judged would be significantly impacted.
In more detail: under the transitional provisions some judges were:
- allowed to remain in the JPS until their retirement; and some
- allowed to remain in JPS for a transitional period only.
The sole determining factor as to which transitional measure (if any) applied to which member was the individual’s date of birth. With the older judges benefitting the most from the transitional arrangements.
Under the Equality Act 2010 discrimination on grounds of age is illegal unless it can be objectively justified. In this case the defendants admitted age discriminatory behaviour but claimed it was objectively justifiable.
A tribunal was convened to hear the arguments in November 2016.
Whilst there have been significant changes in recent years to civil servants’ pensions as a whole, judges were found to be disproportionately disadvantaged for two main reasons:
- a judge’s pension represents proportionately more of their overall income than for other civil servants because they start working later and often don’t retire until age 70; and
- the JPS was an unregistered scheme and the replacement scheme was registered, resulting in significant tax liabilities being incurred by those concerned, primarily as a result of the annual allowance and lifetime allowance, which had no previously been applied to the judges’ benefits.
Various factors were considered by the tribunal:
- the claim that older judges would have less time to prepare for the financial effects of the change.
(The tribunal's view was that whilst older judges would have a shorter time in which to respond to adverse changes the shortness of time was in direct proportion to the adversity of changes affecting them. i.e. the older judges would face the least adversity.)
- the claim that older judges may be more likely to have fixed retirement plans which could not be easily changed.
(As there was no evidence supporting this assumption it was dismissed by the tribunal.)
- it was established that the cost of providing the transitional protection was approximately 10% of the expected future cost of the scheme. It was calculated that the tapered protection offered would cost £23m whereas the costs would spiral to £70m if all of the unprotected judges were granted protection;
- the general landscape in respect of final salary pension provision in the UK and the reduction to these benefits which are being seen across the public and private sectors; and
- consistency with other reformed public sector schemes – due to the nature of the benefit structure of the judges' scheme it was noted that "consistency between schemes was scarcely available".
It was noted that the government has two roles in the context of the complaint:
- legislator, setter of public policy, controller of public finances; and
- employer of a large number of civil servants.
This essentially meant its role was a balancing act. One which it appeared to have got wrong.
The judgement refers to the comment by Baroness Hale in Seldon v Clarkson, Wright & Jakes that "purely individual reasons particular to the employer's situation such as cost reduction or improving competitiveness" are not capable of justifying age discrimination.
The tribunal considered that the goal of protecting older judges, who were in fact the least affected by the changes, seemed counter-intuitive. It concluded that the goal of protecting older judges and not extending the same protection of younger judges was not a legitimate goal. The key message here is that reasons for objectively justifying age-discriminatory practices must be logical and convincing. Making assumptions as to the potential effect on a workforce can be very dangerous, such statements will be far stronger if backed up by evidence.
This could have a wide reaching effect on public and private sector schemes which have used objective justification to roll out age-discriminatory changes to their schemes. We keenly await the findings of the case being brought by the Fire Brigades Union which we understand concerns similar issues!