How Does Seldon Impact on the Provision of Employment Benefits?

It is clear following the Supreme Court decision in Seldon v Clarkson, Wright & Jakes that employers seeking to justify direct age discrimination face a more stringent test than for indirect discrimination.  They must rely on aims linked to social policy aims and cannot rely on purely personal business aims. 

The Court accepted that facilitating workforce planning (i.e. allowing employees to move through the ranks) was linked to the social policy aim of sharing work opportunities fairly between the generations.  Likewise, the aim of maintaining a congenial workplace was linked to the social policy aim of preserving dignity (by avoiding the need to performance manage older workers).   However, the case was remitted to the employment tribunal to consider whether the choice of age 65, rather than another age, was appropriate and necessary or whether the firm’s aims could have been achieved by less discriminatory means.  

Jennifer Nicol explains what this means in the context of employment benefits:

“The decision in this case applies to justifying any form of less favourable treatment on grounds of age, not just compulsory retirement ages.  If an employer ceases to provide a benefit once an employee reaches a particular age (or only starts providing a benefit at a particular age) this will be direct age discrimination and will need to be justified, otherwise it will be unlawful.  However, identifying social policy aims is likely to prove more difficult in this context than in relation to retirement where workforce planning will normally feature in an employer’s justification.  Even if employers can get over this hurdle, they will still have to show that the aim is legitimate in the context of their business and that the particular age they have chosen to start/stop providing the benefit is justified.

It is, however, worth remembering that there is an exception in the Equality Act 2010 which allows employers to cease providing group risk insured benefits to employees at the age of 65.  This applies to insured benefits such as life assurance, health insurance and income protection insurance.  However, it appears only to apply if the employer stops providing the benefit as soon as the employee reaches the age of 65.  Being more generous and stopping the benefit at an older age will not fall within the exception and so would need to be justified.  Note also that the exception does not apply to employers who self-insure.”