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Can indirect age discrimination ever be justified?

  • Ireland
  • General

17-10-2013

The implications of the Labour Court recommendation in Hospira v Roper and others

According to UK research, ageism is the most prevalent form of discrimination. Some 50% of individuals surveyed believed they were written off as “old” once they reached 50. In Ireland, the aim of the Employment Equality Acts 1998–2011 (the ‘Acts’) is to prevent both direct and indirect discrimination in relation to employment based on age and eight other grounds outlined in the Acts.

Until recently, the Irish Court’s have been reluctant to allow an employer to justify a decision which would  otherwise lead to indirect age discrimination. In the recent landmark decision of Hospira v Roper published last month, the Labour Court (the ‘Court’) overturned a decision of the Equality Tribunal and allowed an employer to justify caps on redundancy payments which impacted most closest to retirement age.

Background

The complainants in the case had been employed by Hospira for between 16 and 25 years. They were made redundant when the plant in which they worked was closed. The negotiated redundancy terms provided for a payment of five weeks’ pay per year of service in addition to statutory redundancy payments. However, where an employee was close to retirement age, they would receive either the terms of the agreed package or the salary which they would have earned had he remained employed until the normal retirement age of 65, whichever was the lesser. Each of the complainants fell within the second category. They would receive an amount equal to their potential earnings up to age 65 which, in their case, was less than the amount paid to younger workers. They complained to the Equality Tribunal, claiming that they had been discriminated against on grounds of their age.

The Equality Officer found that the decision to provide different redundancy packages based on an  employee’s proximity to retirement constituted age discrimination. He rejected the employer’s argument that section 34(3) (d) of the Acts permitted the employer to calculate the payments in this way. He upheld the complaint and his decision was appealed to the Labour Court.

Preliminary Issue

A preliminary issue arose in the appeal regarding whether the employees were entitled to bring the claim. They had each signed a discharge agreement confirming that the sum paid to them was in full and final settlement of all claims under both statute and common law. The Court did not give a concluded view on the point, but stated that it considered that the employees had made it clear that they did not accept that they could lawfully be paid a reduced sum because of their age, and that the respondent employer was aware of that. The Court allowed the appeal to proceed.

Determination of the Court

The Court determined that the underlying EU Directive provides that Member States, rather than individual
employers, can provide for differences in treatment on grounds of age where those differences can be objectively justified by a legitimate business aim. The Court found that the Oireachtas had made express provision for differences in treatment based on age in respect of severance payments through section 34(3)(d).

The Court stated that the rationale for this provision is that workers close to retirement are in a  substantially different position” to those who expect to remain in active labour for a longer period. The Court stated that as a matter of social and labour market policy, the difference can be legitimately referred to in determining redundancy packages. The Court said that it appeared that the Oireachtas considered it reasonably and objectively justifiable, to provide for the differences in treatment allowed for by section 34(3)(d) of the Acts.

Accordingly, the Court found that the method of calculating the redundancy packages was permitted by Irish law and overturned the decision of the Equality Tribunal.

Significance of the decision

This decision contrasts authorities in both Ireland and Europe on the requirement for an employer to objectively justify any perceived indirect discrimination in cases involving age discrimination. The case shows a keenness by the Court to recognise the justification arising from social and labour market policies. It is likely that the case will have implications for employers not only in relation to the calculation of severance payments, but also in the context of justifying specific retirement ages.

 

Disclaimer

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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