Age discrimination – Retirement age

R (on the application of AGE UK) (claimant) v Secretary of State for Business, Innovation & Skills (defendant) & (1) Equality & Human Rights Commission (2) HM Attorney General (intervenors): QBD (Admin) (Mr Justice Blake): 25 September 2009

The claimant organisation (X), by its application for judicial review, challenged the legality of the Employment Equality (Age) Regulations 2006. The regulations were intended to implement Directive 2000/78, which required the UK to legislate to give effect to its terms, inter alia, in the field of age discrimination. Before the coming into force of the regulations, there were no legislative provisions within the UK which prevented discrimination on grounds of age in relation to employment and occupation. Employers were able to dismiss employees who had reached the employer’s normal retiring age or the age of 65. Employees who were dismissed on grounds of retirement could not claim unfair dismissal or redundancy payments. The implementation of the directive by the regulations substantially altered the law so that employers had not to discriminate on the grounds of age, save where such discrimination was justified. X contended that the regulations were over-broad in what they permitted by way of derogation from the principle of non-discrimination and thereby failed to give effect to the terms of the directive and were liable to be struck down or declared invalid. X submitted that regulation 3 permitted employers to justify direct discrimination on the grounds of age and regulation 30 provided that it would not constitute unlawful discrimination for an employer to dismiss an employee on the grounds of retirement at age 65, the UK’s designated retirement age (DRA). The defendant secretary of state contended that X’s submissions as to regulation 3 had already been dismissed by the European Court of Justice in the case of R (on the application of Incorporated Trustees of the National Council on Ageing (Age Concern England)) v Secretary of State for Business, Enterprise and Regulatory Reform (C-388/07) (2009) All ER (EC) 619 ECJ (3rd Chamber), and, further, that adopting a DRA of 65 for the purposes of regulation 30 was a matter well within the competence of the UK in giving effect to the directive, having regard to the margin of appreciation afforded to member states in respect of social and economic policy, such as protecting the integrity of the labour market.

Held: (1) A wide margin was to be afforded member states in formulating social policy. In a challenge brought promptly to the legality and sufficiency of a transposition of community law on the basis that the national measures were ultra vires the enabling power under the European Communities Act 1972, the question was principally to be determined by reference to the social policy aims identified by the government at the time of transposition. Governments had to be free to govern, and businesses had to be free to conduct business, although judges had also to judge, which they could do by applying well-established principles of proportionality and, in so doing, apply an appropriate intensity of inquiry while ensuring that they did not stray beyond their proper constitutional competence and usurp the prerogatives of the executive on sensitive social issues for which it was ultimately accountable to the electorate, R v Secretary of State for Employment Ex p Seymour-Smith (No2) (2000) 1 WLR 435 HL applied.

(2) The government had proved to the requisite high standard that it had had social policy concerns in protecting the integrity of the labour market. Those concerns were legitimate within the principles of the directive and community case law. The government had been entitled to take the view that there was little point in developing the principle of age discrimination in the field of employment if it resulted in fewer UK jobs altogether for young and old alike, or jobs being generally offered on worse terms to accommodate the increased costs created by uncertainty. Sufficient policy aims had been identified and the application of the regulations could be determined in accordance with the purposes and principles of the directive, Age Concern applied. The social aims relied on by the government were ones in which the state enjoyed a wide margin of appreciation. Whereas the individual employer justifying regular practices or treatment in reliance upon that social aim had a more rigorous task and where discrimination remained unjustified it would be unlawful. There was, therefore, no illegality in the form of transposition of the directive in regulation 3.

(3) The promotion of regulation 30 and the concept of a DRA was based upon a social policy aim that might generally be described as maintaining confidence in the labour market and providing guidance on the contentious issue of retirement and discrimination. The idea of a DRA had not been adopted on the basis of any generalised assumption that people over 65 were not reasonably capable of competent performance of their duties, nor was it a disproportionate way of giving effect to the social aim of labour market confidence. A DRA was not a generalised statement of social worthlessness but a measure designed to give certainty and corresponding focus for planning purposes for employers and employees alike. While regulation 30 was direct discrimination that would result in considerable numbers of older members of the workforce who wanted to continue in employment not being able to challenge an employer’s decision to the contrary, it did not go beyond the competence of the government in applying the directive or outside the discretionary area of judgment available in such matters. Regulation 30 was, accordingly, not ultra vires the directive.

Application refused.

Robin Allen QC, Declan O’Dempsey (instructed by Irwin Mitchell) for the claimant; Dinah Rose QC, Emma Dixon (instructed by Treasury Solicitors) for the defendant; Lord Lester QC, Diya Sen Gupta for the first intervenor.