Secretary of State for Trade and Industry v Rutherford (No 2)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery,Lord Justice Scott Baker,Lord Justice Potter |
| Judgment Date | 03 September 2004 |
| Neutral Citation | [2004] EWCA Civ 1186 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A1/2003/2224; A1/2003/2223 |
| Date | 03 September 2004 |
[2004] EWCA Civ 1186
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
MR JUSTICE WALL
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Potter
Lord Justice Mummery
Lord Justice Scott Baker
Case No: A1/2003/2224; A1/2003/2223
MR ROBIN ALLEN QC MS RACHEL CRASNOW and MR PAUL TROOP (instructed by Charles Russell and Islington Law Centre) for the Appellants
MR DAVID PANNICK QC MRS MELANIE HALL QC and MS KASSIE SMITH (instructed by The Treasury Solicitor) for the Respondent
Introduction
In form these are commonplace claims for unfair dismissal and redundancy pay brought in the employment tribunal by two elderly male employees. In substance they are complaints of indirect sex discrimination in access to the benefits of basic employment rights. The ambitious aim of the two test actions is to secure judicial disapplication of long standing statutory limitations on the jurisdiction of the employment tribunal.
The charge of indirect sex discrimination is founded on the upper age limit (in these cases 65) imposed by Parliament for both men and women on access to the relevant rights. The issue is whether the age limit is indirectly discriminatory of men and therefore incompatible with European Community law on equal pay. In order to avoid any misunderstanding it should be stated at the outset that the issue is not one of (a) direct sex discrimination; or (b) age discrimination; or (c) discriminatory conduct for which an employer is directly or vicariously liable. The target is the alleged discriminatory effect of the legislation itself, as was the case in R v. Secretary of State for Employment Ex p Equal Opportunities Commission [1995] 1 AC 1.
Although there is quite a simple answer to the indirect discrimination point, it has become virtually impossible and almost unacceptable to decide points of this kind in short form. The legal materials on indirect discrimination and equal pay are increasingly voluminous and incredibly intractable. The available arguments have become more convoluted, while continuing to multiply. Separating the wheat from the chaff takes more and more time. The short snappy decisions of the early days of the industrial tribunals have long since disappeared. They have been replaced by what truly are "extended reasons" which have to grapple with factual situations of escalating complexity and with thicker seams of domestic and EC law, as interpreted in cascades of case law from the House of Lords and the European Court of Justice.
It will come as no surprise to those familiar with these developments to learn that five years after they were started these cases are still stuck at the most preliminary stage of litigation: establishing the jurisdiction of the tribunal to hear the claims. There have been two substantive hearings in the employment tribunal (sitting at London East). The second hearing lasted for 10 days in June and July 2002. There have been two full hearings in the employment appeal tribunal. The first judgment given by Lindsay J on 10 July 2001 is reported as Harvest Town Circle Ltd v. Rutherford at [2002] ICR 123 ( Rutherford 1). It is no criticism of the second judgment of the employment appeal tribunal, from which these appeals have been brought, to describe it as monumental. It is 100 pages long. It has 226 paragraphs. The explanation for being an "extremely long" decision is supplied in paragraphs 4 and 5 of the appeal tribunal judgment. It is, as one would expect, a comprehensive document, which will be a valuable reference work for use in future cases for years to come. It explicitly sets out to examine all the relevant statutory material and all the case law, domestic and EC, as well as the very full arguments addressed by two leading practitioners in this field on the evidence and the law relating to the two basic issues on the law of indirect discrimination: disparate adverse impact and objective justification.
Unfair dismissal and redundancy pay
The right of an employee under s 94(1) Employment Rights Act 1996 ( ERA) not to be unfairly dismissed by his employer and the right of an employee to a redundancy payment under s135 ERA are subject to qualifying periods of service and to specific exclusions. Prior to 1 June 1999 the qualifying period for unfair dismissal was 2 years. Since then it has been 1 year. The qualifying period for redundancy pay remains at two years continuous service. This appeal is concerned with exclusions in the form of the imposition of an upper age limit on bringing claims for unfair dismissal and redundancy pay. Over 65's in the same position as the two applicants, whether they are male or female employees, are barred from access to compensation for unfair dismissal and to redundancy pay.
Section 109 ERA provides:
"(1) Section 94 does not apply to the dismissal of an employee if on or before the effective date of termination he has attained-
(a) in a case where—
(i) in the undertaking in which the employee was employed there was a normal retiring age for an employee holding the position held by the employee, and
(ii) the age was the same whether the employee holding that position was a man or a woman,
that normal retiring age, and
(b) in any other case, the age of sixty-five."
There is a similar exclusion in s 156(1)(b) ERA in the case of a claim for a redundancy payment. These cases are concerned with the default provision, which specifies 65 as the upper age limit in default of a "normal retiring age" set by the employer for both men and women in the relevant undertaking.
The claims
Both applicants exceeded the default age limit of 65 at the time of their dismissals. There was no "normal retiring age" in either of the relevant undertakings in which the applicants were employed. The first case is a claim for unfair dismissal and redundancy pay by the appellant Mr John Rutherford. He was dismissed by Harvest Town Circle Ltd in September 1998 at the age of 67. Harvest Town passed a winding up resolution on 27 February 2001 and is insolvent. The second case is a claim for redundancy pay and wages by the other appellant, Mr Samuel Bentley, who was dismissed by Bodner Elem Ltd on 9 February 2001 at the age of 73. Bodner Elem was put into administrative receivership at the time of Mr Bentley's dismissal and is insolvent. As explained later, the insolvency of Mr Rutherford's and Mr Bentley's employers has led to the joinder of the Secretary of State for Trade and Industry as a party.
Tribunal decisions
The employment tribunal has twice held (in extended reasons promulgated first on 16 July 1999 and secondly on 22 August 2002) that it has jurisdiction to hear the two originating applications, despite the fact that each applicant was over 65 at the time of his dismissal. It held that the imposition of the upper age limit, although now expressed to be the same for both men and women employees (it was previously 60 for women, but was amended to be the same as for men following the ruling of the Court of Justice in Marshall v. Southampton and SW Hampshire Health Authority [1986] ICR 335), had a greater adverse impact on men than on women. The tribunal held that the exclusions were indirectly discriminatory of men. They were incompatible with the directly effective principle in Article 141(ex Article 119) of the Treaty of Rome of "equal pay for male and female workers for equal work or work of equal value" (i.e. equal pay without discrimination based on sex). They were not objectively justifiable. The tribunal accordingly disapplied the statutory default age limits on claims for unfair dismissal and redundancy pay and held that it had jurisdiction to entertain the claims.
On 2 October 2003 the employment appeal tribunal allowed the appeal by the Secretary of State, set aside the second decision of the employment tribunal and dismissed the claims of Mr Rutherford and Mr Bentley. (The first employment tribunal decision had been set aside by the employment appeal tribunal on 10 July 2001 and the matter remitted for re-hearing by the employment tribunal). The applicants now appeal to this court contending that the decision of the employment tribunal did not contain any error of law entitling the appeal tribunal to overturn its decision.
Common ground
Many aspects of the cases under appeal are not in dispute:
(1) The claims for unfair dismissal and redundancy are made under the ERA. They are not claims for sex discrimination under the Sex Discrimination Act 1975 nor are they claims for age discrimination.
(2) The cases on the interpretation of the principle of equal pay without discrimination based on sex in Article 141 and its predecessor (Article 119) establish that (a) "pay" includes compensation for unfair dismissal and redundancy payments; (b) the principle applies to cases of indirect, as well as direct, discrimination; and (c) indirect discrimination, unlike direct discrimination, may be objectively justifiable by factors unrelated to grounds of sex. (The legal position was summarised by Lindsay J in paragraph 5 of Rutherford 1, which is cited in paragraph 24 of the judgment of the employment appeal tribunal.)
(3) Article 141 does not define the test for determining indirect discrimination. There is no decision of the European Court of Justice or of the English Courts on the precise issue at the heart of this case: how to define the relevant pool of employees for the purposes of determining whether there is indirect discrimination by the...
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