The test for justifying direct age discrimination has recently been clarified – and not before time…

The Supreme Court has held (in the case of Seldon -v- Clarkson Wright and Jakes) that the test for justifying direct age discrimination is different and narrower than the general test for justifying indirect discrimination.

The test, as now clarified, is that employers must show:-
• They have an aim;
• That aim is potentially legitimate in that it is capable of being a ‘public interest’ aim. Aims based on ‘public interest’ are distinguishable from purely individual aims which are particular to the business, e.g. cost reduction or improving competitiveness;
• The aim is also legitimate in the particular circumstances of the case. A potentially legitimate aim within the Directive may not be so for the particular business concerned. For example, avoiding the need for performance management is an aim directly connected with the ‘public interest’ aim relating to ‘dignity’ but if, in fact, the business already has sophisticated performance management procedures in place, it may not be legitimate to disapply them for one section of the workforce. This is quite complex and requires particular scrutiny of the aim in the context of the individual business to see if it is legitimate for that employment;
• The means chosen to achieve the aim must be both appropriate and necessary. In Homer -v- Chief Constable of West Yorkshire Police (see below), the Supreme Court emphasises that proportionality must be approached by considering both these aspects separately. This will involve considering whether there are other, less discriminatory, measures which would achieve the aim.

The scope of indirect age discrimination has also been clarified…

In the Supreme Court decision in Homer -v- Chief Constable of West Yorkshire Police regarding the scope of indirect discrimination on the ground of age, a conclusion was arrived at which, on the face of it, appears obvious – namely that retirement and age are inextricably linked…

At the age of 51 Mr Homer began working for the Police National Legal Database. He had no degree in law, but, when he was appointed, a law degree was not a requirement of the job. He had the other relevant experience and skills required to hold down the post.

A new grading structure was then introduced. There were three promotion thresholds, the third and final one requiring a law degree. Because of this requirement Mr Homer could not get to level three unless he embarked on a part time law degree alongside his day job, which would have taken 4 years. When the new requirement came in Mr Homer was already 62, and being required to retire at 65 (this was before the abolition of the default retirement age), he would not have been able to enjoy the level three promotion before he had to leave his employer.

He brought a claim of age discrimination. His claim was for indirect discrimination in that he had been subject to a provision, criterion or practice which put persons of his age group (including him) at a particular disadvantage compared with other persons.

The EAT and Court of Appeal had rejected Mr Homer’s claim. Their view was that what put Mr Homer at a disadvantage was not his age, but his impending retirement. His position was therefore comparable with any other employees nearing the end of their employment, for whatever reason.

The Supreme Court disagreed with this analysis and upheld Mr Homer’s appeal. Persons in his position were disadvantaged because of a reason (retirement) that directly related to their age. It could not be correct to equate leaving because of impending retirement with other reasons for doing so.

Although Mr Homer was indirectly discriminated against on ground of age it was still open for the employer to justify the discriminatory requirement so that issue was remitted to the employment tribunal for consideration.

The Enterprise and Regulatory Reform Bill was laid before Parliament on 23 May.

Quite separate from the proposals made in the Beecroft report, this new Bill provides for:

• a mandatory period of Acas conciliation before instituting tribunal proceedings (with a significant amount of detail to be set out in regulations which are not yet available);
• the extension of limitation periods to allow for pre-claim Acas conciliation;
• the introduction of ‘legal officers’ to make decisions in certain cases if all parties agree in writing;
• EAT cases to be heard by a judge alone, unless ordered otherwise;
• the Secretary of State to be able to limit the unfair dismissal compensatory award to a maximum sum sitting between 1 x and 3 x national median earnings. BIS is apparently operating on a median average earnings figure of £26,000, meaning that if the power is exercised the compensatory award will be capped at somewhere between £26,000 and £78,000;
• alternatively, the power for the Secretary of State to limit unfair dismissal compensatory award to one year’s earnings;
• the power for a tribunal to impose a penalty on employers of 50% of any financial award, subject to a minimum of £100 and maximum of £5,000, where there are “aggravating features” (not defined), with a 50% discount for payment within 21 days;
• the definition of ‘qualifying disclosure’ in whistleblowing legislation to be restricted to disclosures made “in the public interest” (not defined); and
• ‘compromise agreements’ to be renamed ‘settlement agreements’.

There’s a recurring theme here, as you can see – much of the devil will be in the detail and we don’t have the detail yet.

Furthermore in our experience the service provided by Acas is already seriously over-burdened and it is hard to see how it would cope with the increased workload contemplated by the Bill. It’s enough to make your head spin. The Government certainly seems intent upon making things “interesting” for the nation’s employers. We shall keep you posted!

At Pharos Legal we have been watching the impact of the unveiling of the Beecroft report with interest.

The leaked report recommends, among other things, the introduction of ‘compensated no-fault dismissal’ for all businesses and exemptions from unfair dismissal law for small businesses with fewer than 10 employees.

The report claims that ‘making it easier to remove underperforming employees will in the short run not increase unemployment as they will be replaced by more competent employees. In the long run it will increase employment by making our businesses more competitive and hence more likely to grow’.

Business Secretary Vince Cable has subsequently taken care to end speculation that the Government will introduce no-fault dismissal for all businesses, stating that, in his conversations with businesses, no-fault dismissal ‘has very rarely been raised with me as a barrier to growth’ and that businesses ‘are much more concerned about access to finance or weak demand’.

Mr Cable will be assessing the case for no-fault dismissals when the Government’s call for evidence on the introduction of compensated no-fault dismissal for micro business closes on 8 June 2012.

Whilst we are in no doubt that something needs to be done in order to boost the economy (answers on a postcard!), we are of the view that further legal reforms are unlikely to be the answer. The headlines made attractive reading (“We need to make these changes to boost the economy!”) but has the economic impact of the recent and proposed changes to employment law been quantified? No. The purported benefits are simply not supported by any evidence.

Following the success of our session in March, the Pharos Legal team is delighted once again to team up with Linked2Success to deliver an interactive session focussing on how your business can use and benefit from (but not be abused by) social media.

This interactive session, on 20 June in Leeds, will help you understand how to harness the power of social media to promote your personal/business brand, find new business opportunities and strengthen relationships with existing clients.

Linked2Success will present key aspects of LinkedIn as an important business to business marketing tool and explain how Twitter & Facebook can also be included in the marketing mix to build business relationships and drive traffic to your website.

Pharos Legal will then explore and discuss the legal issues around confidentiality and the protection of reputation, relationships and productivity in the context of the use (by businesses and staff for business purposes and by staff for personal purposes) of social media. The key being how to protect businesses against the misuse of social media.

There will also be review of recent cases concerning social media so as to put the legal issues into a practical context and delegates will be given practical steps that can be used to protect their business.

Please see here for further details: Social media seminar and join us on 20 June to find out more!

This is a case which emphasises the danger of accepting received wisdom about employment status…

The lapdancing industry has traditionally considered its lapdancers to be self-employed and treated them accordingly. Self-employed individuals are treated differently to employed individuals for both employment law and tax purposes.

In the recent case of Quashie v Stringfellows Restaurants Limited UKEAT/0289/11, however, the Employment Appeal Tribunal (“EAT”) reversed an employment tribunal’s decision to dismiss an unfair dismissal claim on the grounds that the lap dancer claimant was not an employee.

The EAT held that on a proper construction of the employment tribunal’s findings, the claimant was an employee. The respondent had the right to control the claimant’s activities when she was at work and even though the claimant worked under an ‘umbrella contract’ covering each separate engagement, the relationship gave rise to an expectation of continued engagement. As such there was sufficient mutuality of obligation for employment status.

It was also neither here nor there that the lapdancer was paid, in effect, by clients rather than the respondent (via the beautifully coined “Heavenly Money” vouchers).

The moral of this tale being that just because “everyone says” a certain type of worker is self-employed does not make it true as a matter of law. It is a truism, but each case turns on its own specific facts.