Taylor v Secretary of State For Scotland (Scotland)

The central issue was whether an express equal opportunities policy in the employer's contractual documentation restricted the employer's contractual discretion to retire staff who had reached the agreed minimum retirement age, and whether the enforced retirement of the appellant at age 58 therefore breached that contractual term by amounting to age discrimination. The House of Lords applied orthodox principles of contractual construction and held that the contract must be read as a whole: the equal opportunities policy did not remove or override the existing contractual provisions relating to minimum retirement age and the employer's discretion, as set out in the letter of 25 July 1991. Because retention after the minimum retirement age remained a matter of employer discretion and was exercised, as applied to all retained staff, in a non-discriminatory way, there was no breach of the contractual equal opportunities term.

This was an appeal from the Court of Session concerning the contractual effect of an employer's equal opportunities policy on retirement arrangements. The appellant had joined the Scottish Prison Service in 1971 on terms that included a minimum retirement age and conditions for retention beyond that age (set out in a letter of 25 July 1991). An equal opportunities policy was circulated in 1992. Following organisational change and an agreement between management and trade unions in May 1994, measures to target staff aged 55 and over for early retirement were adopted and implemented by circular in September 1994. The appellant, retained after age 55, was retired on 30 September 1995 at age 58 and brought proceedings claiming unfair dismissal, breach of contract and breach of the contractual equal opportunities term.

The industrial tribunal rejected unfair dismissal and breach of contract claims but found contractual age discrimination; the Employment Appeal Tribunal allowed the employer's appeal and quashed that finding; the Court of Session dismissed the appellant's appeal against the EAT decision. The House of Lords was asked to decide whether the equal opportunities policy formed an enforceable contractual limitation on the employer's discretion to retire retained staff prior to age 60.

The issues framed were (i) whether the equal opportunities policy was part of the appellant's contract, (ii) whether it limited the employer's discretion to retire staff after the minimum retirement age, and (iii) whether the staged targeting of those over 55 for early retirement was a breach of the contractual prohibition on age discrimination. The court reasoned that contractual provisions must be read together; the equal opportunities policy did not, expressly or by necessary implication, abrogate the pre-existing retirement provisions or the employer's expressly reserved discretion. That discretion was applied uniformly to the category of retained staff over the minimum retirement age and thus was not a breach of the contractual equal opportunities term. The House of Lords therefore dismissed the appeal.

Appeal dismissed. The House of Lords held that on proper construction of the contract the equal opportunities policy did not remove or qualify the employer's expressly reserved discretion to retire staff after the minimum retirement age; the exercise of that discretion as applied to all retained staff over the minimum retirement age was not a contractual breach by reason of age discrimination.

Industrial Tribunal: found no unfair dismissal and no breach of contract but found contractual age discrimination. Employment Appeal Tribunal (26 August 1997): allowed employer's appeal and quashed the discrimination finding. Court of Session (18 December 1998): dismissed the appellant's appeal (opinion by Lord Caplan). House of Lords: appeal dismissed [2000] UKHL 28.