• GL
Choose your location?
  • Global Global
  • Australia
  • France
  • Germany
  • Ireland
  • Italy
  • Poland
  • Qatar
  • Spain
  • UAE
  • UK

Age discrimination: Can direct age discrimination in relation to retirement benefits be justified?

13 March 2018
Glass enclave reception area of a corporate building
The Court of Appeal has confirmed in Air Products v Cockram that it is possible for an employer to objectively justify including "retirement" as a good leaver reason within a long term incentive plan ("LTIP") with reference to a specific age. Consequently, the Claimant's complaint of age discrimination failed.

In Air Products v Cockram, Mr Cockram brought a claim relating to the unvested LTIP awards which he was deemed to have forfeited when he resigned from his employment aged 50. The Air Products LTIP contained a provision which permitted employees who left employment on or after "the customary retirement age" to keep their unvested awards.  Any employees leaving before the customary retirement age, which was fixed at age 55, lost their unvested awards.  As Mr Cockram was aged 50 when he resigned, he lost his unvested awards. Mr Cockram considered this to be unlawful direct age discrimination.

Direct age discrimination is the only form of direct discrimination that provides an opportunity for an employer to objectively justify the discriminatory act or provision. In order for an act or provision of direct age discrimination to be objectively justifiable the employer must show that the otherwise unlawful provision or treatment is a "proportionate means of achieving a legitimate aim". However, for cases of direct age discrimination, an aim will only be deemed "legitimate" if it accords with a social policy aim.

Air Products sought to rely on two key points to demonstrate that their "good leaver" retirement provision was implemented to achieve a legitimate social policy aim:

  • to act as a retention incentive to employees not to leave employment until age 55 and then to provide some incentive for employees to retire from age 55 onwards in order to create opportunities for younger employees; and
  • to achieve consistency between employees in Air Product's Defined Benefit ("DB") and Defined Contribution ("DC") pension schemes.

The Court of Appeal accepted Air Products' argument that the above aims met a real need and were legitimate as they were deemed to accord to the social aim of intergenerational fairness.  Lord Justice Bean noted that "intergenerational fairness is in principle a legitimate aim. It is a broad objective, which may be manifested in different ways, depending on the circumstances."

Further, the Court of Appeal held that the retention element of the good leaver provision provided a balance between encouraging the retention of older employees whilst in turn ensuring a mix of generations of staff which adhered to the social aim of intergenerational fairness.

Additionally, the Court of Appeal found that setting the "customary retirement age" at 55 was appropriate to achieving the specified aims as there was clear rational behind 55 being the chosen age; it tied in with the minimum pension age set by UK pension law on 6 April 2010.

Comment

Further guidance on legitimate social policy aims and consideration of intergenerational fairness is undoubtedly useful for employers.  The outcome of this case will give encouragement to employers who have undertaken a variety of approaches to retirement in their incentive plans since the introduction of age discrimination legislation in 2006. The case demonstrates that there is scope to justify including retirement as a specific good leaver provision, provided sufficient thought is given to the specified aims of the provisions. 

Authored by Joanne Frew and Nathan Pavitt

 

Further Reading

We use cookies to give you the best user experience on our website. Please let us know if you accept our use of cookies.

Manage cookies

Your Privacy

When you visit any web site, it may store or retrieve information on your browser, mostly in the form of cookies. We mainly use this information to ensure the site works as you expect it to, and to learn how we can improve the experience in the future. The information does not usually directly identify you, but it can give you a more personalised web experience.
Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change permissions. However, blocking some types of cookies may prevent certain site functionality from working as expected

Functional cookies

(Required)

These cookies let you use the website and are required for the website to function as expected.

These cookies are required

Tracking cookies

Anonymous cookies that help us understand the performance of our website and how we can improve the website experience for our users. Some of these may be set by third parties we trust, such as Google Analytics.

They may also be used to personalise your experience on our website by remembering your preferences and settings.

Marketing cookies

These cookies are used to improve and personalise your experience with our brands. We may use these cookies to show adverts for our products, or measure the performance of our adverts.