Direct age discrimination in relation to retirement benefits was justified
The Court of Appeal has held in Air Products plc v Cockram that an employer's rule restricting the right to take stock options on retirement to those aged 55 or over was objectively justified age discrimination.
At first instance the tribunal had decided that discrimination resulting from a retirement provision under AP plc's Long Term Incentive Plan (LTIP) (this provided that participating employees who left employment on or after the customary retirement age (55) were permitted to retain their awards) was a proportionate means of achieving three legitimate aims. AP plc aimed to achieve consistency between its defined benefit (DB) and defined contribution (DC) pension scheme via the aims of intergenerational fairness and consistency between DB members (who could retire at 50) and DC members (who could not); rewarding loyalty; and ensuring a mix of generations of staff to promote the exchange of experience and new ideas.
On appeal the EAT held that the tribunal had failed to fully consider and explain its decision, but the Court of Appeal restored the tribunal's decision. It found that the tribunal had been entitled to find that the employer's retention-related aim was a legitimate social policy aspect of intergenerational fairness.
Take note: If a decision is taken to change retirement benefits, employers will have to ensure that any potentially age discriminatory provisions are capable of objective justification. Intergenerational fairness is, as Cockram proved, likely to be a legitimate aim, provided that evidence can be produced to show that the measures taken result in such fairness.
This article is taken from HR Law - April 2018.