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|Session 2005 - 06|
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|Judgments - Secretary of State for Trade and Industry (Respondent) v. Rutherford and another (FC) (Appellants) and others
LORD NICHOLLS OF BIRKENHEAD
1. Most people in this country who work as employees stop working by the time they are 65 years of age. The percentage of the workforce carrying on after that age is very small. One disadvantage suffered by those who do continue working is that they no longer have the benefit of redundancy pay or compensation for unfair dismissal. A higher proportion of men continue in employment after 65 than women. So, it is said, the cut-off age fixed by the employment legislation indirectly discriminates against men. An apparently neutral statutory provision has in fact a disparate impact on men. That is the claim in these proceedings. The legislative cut-off age, it is said, infringes the equal pay obligations imposed by article 141 of the EC Treaty.
2. This summary over-simplifies the facts. The detailed facts are set out by my noble and learned friend Lord Walker of Gestingthorpe. But the summary suffices to identify the essential issue.
3. My Lords, these facts seem to me to give rise in principle to an issue of indirect sex discrimination. Workers who retire under 65 have the statutory protection of redundancy pay and compensation for unfair dismissal throughout their working lives. Those who continue to work beyond that age do not. They lose that protection when they are 65. Of course most employees do not want, or are not able, to work beyond the age of 64. For present purposes that is nothing to the point. All employees wish to have the statutory protection so long as they are working. Those who retire under 65 have that protection, those who retire later do not. For present purposes, that is the appropriate characterisation of the impact of the statutory cut-off age.
4. In my view, however, the claim in the present case founders at an early stage. The percentage of employees who are not adversely affected by the cut-off age is about 98.8%. In the make-up of this group there is virtually nothing to choose between men and women. The percentage of male employees not adversely affected is 98.6%. The corresponding figure for women is 99.0%. The percentage of employees who are adversely affected comprises the residual figures. This group comprises 1.2% of the workforce, and the split between men and women is 1.4% men and 1.0% women. This group comprises about 320,000 employees altogether.
5. I do not think these figures show that the impugned legislation has an adverse impact on a substantially higher proportion of men than women. Substantial numbers of employees are involved. But the ratio of women and men who are adversely affected is 1:1.4. In the context of a national scheme applicable alike to men and women in an employed workforce of over 26 million workers, of whom only 1.2% are affected by the cut-off age, I consider this ratio does not suffice to establish the necessary degree of disparate impact as between men and women. For this reason, explored more fully in the speech of Lord Walker of Gestingthorpe, I would dismiss this appeal.
LORD SCOTT OF FOSCOTE
6. These appeals raise a short point. Sections 109 and 156 of the Employment Rights Act 1996 impose, in their application to the two appellants, a cut-off age of 65 for "the right not to be unfairly dismissed " (s.94(1) and s.109(1) of the 1996 Act) and for the right, on dismissal for redundancy, to a redundancy payment (s.156(1) of the 1996 Act). Mr Rutherford was dismissed when he was aged 67. He wants to claim a redundancy payment and compensation for unfair dismissal. Mr Bentley was dismissed when was aged 73. He wants to claim a redundancy payment. At first blush the statutory provisions appear to stand in their way. But both appellants contend that under EC law, Article 141, the statutory bar constitutes indirect discrimination against them on the ground of their sex and is therefore unlawful. They accept, of course, that the statutory bar does not constitute direct discrimination against men. The statutory provisions are neutral in their terms, expressed to apply to all men and all women in employment after the age of 65. The appellants point, however, to statistics that show that relatively more women than men leave employment under the age of 65 and, consequently, that relatively more men than women over the age of 65 are still in employment. This shows, they say, that relatively more men than women are prevented by the statutory bar from making unfair dismissal or redundancy claims and that this disparate effect constitutes indirect discrimination. The short point is whether they are right.
7. This short point produced a judgment of some 14 pages by the Employment Tribunal (which held that the appellants' contention was right), a judgment of over 100 pages by the Employment Appeal Tribunal (which held it was not) and a judgment by Mummery LJ in the Court of Appeal, agreed to by the other members of the Court, that, in a mere 14 pages, upheld the EAT. Mummery LJ commented on the lamentable state of complexity and obfuscation which appeared to attend this area of employment law. In paragraph 3 of his judgment, set out by my noble and learned friend Lord Walker of Gestingthorpe in his opinion (para 37) which I have had the opportunity of reading in advance, one finds references to the "increasingly voluminous and incredibly intractable" legal materials on indirect discrimination, to the arguments becoming "more convoluted, while continuing to multiply" and to the "cascades of case law" from this House and from the European Court of Justice. Any judge who reads references of that character is likely instinctively to feel that something has gone awry with the jurisprudence about indirect discrimination.
8. It is not that the concept of indirect discrimination on the ground of sex is difficult to express or to understand. The concept is succinctly defined in the Burden of Proof Directive (97/80/EC) -
The text of the Directive that I have cited contains, first, a statement of the situation that must be found to exist - it must be shown that a substantially higher proportion of the members of one sex than the members of the other sex are disadvantaged by the provision in question - and, second, if that situation is shown to exist, a requirement that the need for the provision be justified. So, where a complaint of indirect discrimination is made two issues potentially arise. Both have been argued before your Lordships on these appeals but I want to concentrate for the moment on the first. Unless the requisite situation of relative disadvantage can be shown, the second issue, the issue of justification, does not arise.
9. The Directive speaks of a "substantially higher proportion of the members of one sex" being disadvantaged. This is the language of comparison. It poses the question whether the proportion of men disadvantaged by the statutory bar is substantially higher than the proportion of women disadvantaged by it. The two proportions must be compared. Each proportion, expressed as a vulgar fraction, needs a numerator and a denominator. So the appropriate numerator and denominator must be identified.
10. In relation to each of the fractions required by the Directive to be compared the numerator will be the number of the men (in the one case) and the number of the women (in the other case) who are disadvantaged by the statutory bar. There are two possible views as to who should be included in this disadvantaged group. One view is that the disadvantaged will be those employees over the age of 65 who are dismissed. If their employment is terminated for any reason other than dismissal, i.e. voluntary retirement or death (it is difficult to think of any other terminating event), it is not obvious that they are disadvantaged by a bar on claims for compensation for unfair dismissal or for redundancy payments. An alternative view is that everyone who is in employment over the age of 65 is disadvantaged by the statutory bar. He or she will be working under conditions that allow no remedy for unfair dismissal or for dismissal on redundancy grounds. These seem to me to be the only two possible alternatives for the numerator.
11. The identification of the denominator depends on the choice of numerator. If the appropriate numerator is the number of over 65 year olds who have been dismissed, then the obvious denominator would be the total number of over 65 year olds in employment. The comparison would ask whether the proportion of over 65 year old men in employment who had been dismissed was substantially higher than the proportion of over 65 year old women in employment who had been dismissed. I will refer to this comparison as "comparison A".
12. But if the correct numerator in each fraction is the total number of men, in the one case, and of women in the other case, over the age of 65 and still in employment, the identification of the correct denominator becomes more difficult. One view might be that the denominator should, as in comparison A, still be the total number of men, or of women (as the case may be), over 65 years of age and still in employment. If that is right, the denominator for each of the fractions that are to be compared will be equal to the numerator for that fraction. This choice of the denominator would, in effect, constitute a mathematical expression of the conclusion that this particular type of statutory provision cannot, if the disadvantaged group is to be taken to include all the over 65s still in employment, create a situation of indirect discrimination. This is a startling conclusion, but it should not on that account be discounted and I want to spend a moment or two in considering it.
13. Let me start by emphasising, perhaps unnecessarily, that indirect discrimination is a type of discrimination. The adjective "indirect" has sometimes been criticised as insufficiently descriptive of the type. It has been suggested that "secret" or "concealed" might be more descriptive. But the adjective is less important than the noun. What is being looked for is discrimination. Has one sex been subjected to a disadvantage that the other sex is not subjected to? The Directive, entirely consistently, asks whether the provision in question "disadvantages" one sex proportionately more than the other.
14. The leading case on the subject, R v Secretary of State for Employment ex parte Seymour-Smith which led to a European Court of Justice ruling ( 2 AC 554) followed by a ruling from this House ( ICR 244), was not a case of a provision imposing a disadvantage on some of those in employment but was the much more common case of a provision imposing a condition which those in employment had to satisfy in order to obtain a benefit. The case itself involved a condition requiring an employee to have had two years of continuous employment before becoming eligible to make a claim for unfair dismissal. This condition was neutrally expressed and all employees, regardless of age, had to satisfy it in order to qualify to bring unfair dismissal claims. Statistics, however, showed that proportionately fewer women employees than male employees were able to satisfy it and, accordingly, that a higher proportion of women than of men were disadvantaged by it. The issue turned in the end on whether the disadvantaged proportion of women was "substantially" higher than the disadvantaged proportion of men.
15. I find it easy to see that a condition of the Seymour-Smith type is capable of being discriminatory in its effect. Similarly, contractual or statutory benefits available only to full time employees are capable of being, and have been held to be, discriminatory in their effect. If a proportionately higher number of women than of men work part time the ingredients for a discriminatory effect are present. But where the provision in question does not constitute a condition for obtaining a benefit that some employees are able to satisfy and some are not but imposes a disadvantage on those who remain in employment after a specified age, the situation produced presents a rather different picture.
16. First, it is not possible to speak coherently of those who are "able to satisfy" the condition and those who are not able to do so. The only persons who will be affected by the age-related disadvantage will be those who decide to continue in employment after the specified age. Everyone who survives and for whom employment is available can decide, by not entering or continuing in employment, to be a person unaffected by the disadvantage. Indeed, the statistics wielded in the present case seem to show that proportionately more women than men decide to retire from employment before attaining the age of 65. The tendency appears to start from about the age of 50. The statistical evidence that relatively more women than men decide to retire from employment before they attain the age of 65, with the consequence that relatively more men than women are affected by the statutory bar, does not, in my opinion, constitute evidence of any cogency that the statutory bar discriminates against men. All that evidence shows is that the statutory bar applies to relatively more men than women. But since it applies to everyone over 65 years of age and can apply to nobody under that age, it is difficult to see how the Directive requirement that it disadvantages a higher proportion of the members of one sex than of the other can be satisfied. There are no proportions to compare. The conclusion I would draw is that a difference in treatment of individuals that is based purely on age cannot be transformed by statistics from age discrimination, which it certainly is, to sex discrimination.
17. Some hypothetical examples might serve to illustrate the point I am trying to make. Suppose a taxing statute were to say that the salaries of those in employment over the age of 65 were to be taxed at a rate 5 per cent lower than the rate applicable to the salaries of those under that age. The respective tax rates would apply across the board to everyone in employment but those aged over 65 would have an advantage compared with those under that age. The former would pay less tax. Could the differential be said to be discriminatory against women on the ground that relatively fewer women than men continued in employment after the age of 65? The proposition would, in my opinion, be absurd.
18. Now suppose a case in which the taxing statute said that the salaries of those in employment after the age of 65 were to be taxed at a rate 5 per cent higher than the rate applicable to the salaries of those under that age. This higher rate would, no doubt, discourage some, perhaps many, from continuing in employment after that age. It might discourage relatively more members of one sex than the other. But, so far as those who were not discouraged were concerned, the tax could not, in my opinion, be described as discriminatory against men on the ground that relatively more men than women were not discouraged.
19. In both hypothetical examples there would be a disadvantaged group which would consist of everyone to whom the higher tax rate applied; in the former example, the group would consist of everyone under the age of 65; in the latter example the group would consist of everyone over that age. The composition of the respective groups would not depend upon an individual's ability or inability to satisfy some particular condition. It would depend, of course, on the individual's decision whether or not to continue in employment after the age of 65 and, also, on whether or not he or she survived to that age. The latter condition is essentially non-discriminatory, otherwise than on the ground of age. Age discrimination cannot be turned by statistics into sex discrimination.
20. In each of the courts below the appropriate denominator was taken to be the number of men or women (as the case might be) in the population between the ages of 16 and 64. Each group included those assumed to be employed or to be available for employment. They were described, in contrast to the "disadvantaged" group, whose number would constitute the numerator, as the "advantaged" group. The description of the group as "advantaged" is misleading. The members of the "advantaged" group derive no advantage from the statutory bar applicable to the over 65 year olds. The statutory bar simply does not apply to them. A fraction of which the numerator is the number of male employees over 65 years of age and the denominator of which is the total number of males in the population cannot, in my opinion, be taken to represent the proportion of men disadvantaged by the statutory bar for the purposes of the Directive. The reason it cannot do so is that the two factors which take an individual from the so-called "advantaged" group into the over 65 years of age "disadvantaged" group, namely a decision to enter or continue in employment, and survival beyond that age, do not, whether taken singly or in conjunction with one another, have any sex discriminatory possibilities. In the Seymour-Smith case, the relatively higher proportion of women than men who were able to satisfy the two years continuous employment condition showed that the condition indirectly discriminated against women. It was more difficult for women than for men to satisfy the condition. But the fact that relatively more men than women are affected by the statutory bar that applies to all employees who have attained the age of 65 does not evidence any form of discrimination against men. It is simply a consequence of the fact that more men than women go on working after that age.