Pensions: Appeal against age discrimination (Day 3)

Day three of our appeal saw us involved in more complex legal arguments. The QC who represents the senior judges started the day’s proceedings. Having outlined previously why the judges’ case is so different from ours, he now went on to outline how the law applies and why it applies in the same way to us as well as the judges.

On day one it became clear the major battle is going to be whether the test for justifying direct age discrimination was going to be based on European law, UK law or both. The judges’ QC went through the relevant section of the Equality Act: it doesn’t say that it doesn’t apply to the Government when it makes legislation such as the pensions regulations, it doesn’t say that it doesn’t apply when the government is the employer, and it doesn’t say that the Government, any more than any other employer, can decide that it is legitimate to discriminate for social policy or political reasons.

The UK Government must obey UK law. The Act might be intended to give effect to European law, but there is no need to say it only gives effect to European law if, as the Government is arguing, it gives the Government more leeway when legislating.

There is also a bizarre side effect if the Government is right. Their case is that they have a discretion when deciding what scope to permit direct age discrimination; but even on their case this leeway doesn’t apply to indirect age discrimination. It can’t be right that it is easier for the Government to discriminate directly on the grounds of age than it can be to put barriers in place which have the indirect effect that older or younger employees suffer a disadvantage.

Finally he referred to a UK case involving the Civil Service Compensation Scheme where the Court of Appeal applied the ordinary Equality Act test to a statutory scheme similar to the FPS. As a higher court decision, our judge must either follow that decision or explain why it doesn’t cover the same ground.

He finished by pointing out that the Hutton Commission had said that transitional provisions would be age discriminatory, and the Treasury civil servants had specifically warned the Government not to enact them. Having been warned, the Government couldn’t be surprised to discover that these proceedings had been taken.

The Government then had an opportunity to respond on the legal analysis. They returned to their argument about the correct test, and said that the Equality Act can’t be read literally because it was intended to give effect to European law. And it said that it had a wide discretion, especially where the discrimination derives from political considerations.

Our QC then looked at the specific defects in the Employment Tribunal decision in our case. Going through the decision paragraph by paragraph, he showed that there was no evidence to demonstrate why the Government thought the Hutton Commission was wrong, why it was right to discriminate in favour of the age group which stood to lose least, why it said that the case was parallel to the way in which the State pension age has been increased. To explain the last of these points: the Employment Tribunal judge found that the decision to allow ten years’ protection was made to match the ten years’ warning that it gave that the State pension age would increase. But the reasons behind the State pension age decision were about the savings that any citizen would have to make to prepare for a later retirement.

The real point, however, is that if the Government says what it did is justifiable, it is up to the Government to explain why. It didn’t do that. The Employment Tribunal didn’t look at what the Government’s reasons were, subject them to any real scrutiny and then balance the Government’s ‘need’ to reduce pensions against the damage that the reduction would do to individual members. That is the Tribunal’s job – to conduct the balancing exercise. Our Employment Tribunal judge said that, because the decision was based on political considerations it had a wide margin of discretion and did not have to provide hard, concrete evidence as to why it decided to do what it did and what that was a proportionate and reasonably necessary means to achieve its objectives.

Moreover, if the decision was legitimate it was because it was politically important: does that mean that if the decision was made at cabinet level, less judicial scrutiny is required. If a decision has a big impact, either on particular individuals or on a lot of people, the court should examine even more carefully the Government’s reasoning.

The impact in our case is startling. One of our test cases is a competent firefighter who would have to invest between £16,000 and £19,000 every year to make up his losses. Firefighters who transfer to the 2015 Scheme either have to retire at their FPS pension age to get the full value of their FPS benefits, in which case their 2015 Scheme benefits are reduced; or wait until age 60 and give up 10 years’ worth of pension. They are trapped. And yet the Government Actuary’s own assumption is that anyone with more than 16 years’ FPS membership will retire at their FPS pension age and have their 2015 Scheme pension cut.

Today (Thursday) we have dealt with the sex and race discrimination claims and following this is the summing up. A final report will be produced tomorrow.


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