The Court of Appeal (“CA”) has held that the transitional provisions which were put in place as part of reforms to both the Judicial and Firefighters’ Pension Schemes constitute unlawful direct age discrimination.
Before 1 April 2015, the claimants in McCloud were all members of the Judicial Pension Scheme (“JPS”). The JPS was closed on 31 March 2015 and serving judges were compulsorily transferred into a replacement scheme, the New Judicial Pension Scheme.
Transitional provisions were put in place to allow older judges to remain members of the JPS, either until retirement (“full protection members”) or until the end of a period of tapered protection of approximately ten years (“tapered protection members”), depending on their age.
The claimants in Sargeant were all members of the Firefighters’ Pension Scheme.
In March 2011, the Hutton Report recommended wholesale public sector pension reform, with a view to putting public sector pension schemes on a more sustainable footing. The government enacted reforms through the Public Sector Pensions Act 2013, as a result of which the Firefighters’ Pension Scheme 2015 was introduced.
As in McCloud, transitional measures (which also gave full or tapering protection to members approaching their “normal pension age”) sought to minimise the impact of the reforms for older firefighters.
In both cases it was common ground that the claimants had been treated less favourably on the grounds of age. The issue was whether this less favourable treatment could be objectively justified.
In order to objectively justify treatment which would otherwise constitute unlawful discrimination, broadly, evidence must be produced to show that a provision, criterion or practice is:
To be proportionate, a measure has to be both an appropriate means of achieving a legitimate aim and reasonably necessary in order to do so.
The Employment Tribunal (the “ET”) in McCloud held that the respondents had failed to identify a legitimate aim, or to demonstrate that the transitional provisions were a proportionate means of achieving any assumed legitimate aim. In contrast, the ET in Sargeant held that the transitional provisions at issue in those claims were a proportionate means of achieving legitimate aims.
The Employment Appeals Tribunal (“EAT”) did not disturb the ET’s decision in McCloud. Although it found that the ET judge had misunderstood and/or misapplied the facts and erred in law in concluding that the government parties had not established a legitimate aim, it held that the ET’s analysis of proportionate means was correct.
In Sargeant, the EAT was satisfied with the ET’s findings on legitimate aims but found that it had “erred in law” in its deliberations on proportionality issues. The EAT therefore directed that the matter be remitted to tribunal level for a further hearing.
The CA held that the age discrimination claims in both McCloud and Sargeant were made out. In McCloud, the CA upheld the ET’s conclusions on legitimate aims. This meant that the issue of proportionality did not fall to be considered. As for Sargeant, the CA overturned the ET’s finding that the government parties had established legitimate aims and, as a result, the issue of proportionality again did not arise.
The central issue of law concerned the “margin of discretion” to be applied. The correct approach was for the court to afford the government some margin of discretion in relation to both aims and means, but to determine for itself what the appropriate margin should be in each particular case. Then, applying that appropriate margin, the court must determine whether a particular aim is legitimate or a means proportionate.
The CA emphasised that once a court has established that a social policy aim is capable of being a legitimate aim, it must further determine whether it is in fact legitimate in the particular circumstances of the case. The ET had followed this approach in McCloud. But in Sargeant, the ET had moved straight from finding that the claimed aims were social policy aims, to concluding that those aims were legitimate.
The CA also held that supporting evidence was required to substantiate the legitimacy of the government’s aims. It was not sufficient simply to assert a claimed belief that it “felt right” to protect older firefighters or older judges, and then to characterise the decision to do so as a moral decision incapable of evidential substantiation.
Both claims were remitted to the ET for a remedy hearing, with such remission stayed pending any appeal to the Supreme Court.
Given the success of the age discrimination claims, additional claims relating to equal pay and indirect race discrimination were “of no real practical significance”. The CA did, however, note that these claims were made out.
With the decisions in these two cases now aligned, we wait to see whether there will be a further appeal.