Secretary of State for Trade and Industry v. Rutherford and another (FC) (Appellants) and others

The House of Lords considered whether statutory cut-off provisions in the Employment Rights Act 1996 (notably the effect of section 109(1)(b) and section 156(1)(b) as applied) which deny claims for unfair dismissal and statutory redundancy pay to employees who have attained age 65 amount to indirect discrimination on the ground of sex contrary to Article 141 of the EC Treaty. The lawfulness of the provisions was assessed by reference to the concept of indirect discrimination as articulated in the Burden of Proof Directive (97/80/EC) and the Court of Justice's guidance in Seymour-Smith.

The court held that the correct assessment requires comparing proportions of men and women who are advantaged or disadvantaged by the provision. When the appropriate comparisons are made (taking the relevant workforce as the pool and analysing the advantaged proportions), any disparity between men and women was negligible. The cut-off is an age-based disadvantage and cannot be converted into sex discrimination merely because relatively more men continue working past 65. For these reasons the appeals were dismissed.

This was an appeal from decisions in the lower tribunals and courts about whether statutory exclusions from rights to compensation for unfair dismissal and redundancy payments for employees aged 65 and over infringed Article 141 of the EC Treaty by indirectly discriminating against men. The appellants (Mr Rutherford and Mr Bentley) were male employees dismissed after 65 who sought redundancy payments and (in Rutherford's case) compensation for unfair dismissal and argued the statutory age cut-off had a disparate adverse impact on men because relatively more men than women continue working beyond age 65.

The factual and procedural background: Rutherford brought proceedings in the Employment Tribunal in December 1998; the matter was stayed pending the House of Lords/Court of Justice reference in Seymour-Smith. The Tribunal ruled it had jurisdiction and disapplied the statutory exclusions. The Employment Appeal Tribunal and later courts found against the appellants; the Court of Appeal decision is reported at [2004] EWCA Civ 1186 ([2005] ICR 119). The Secretary of State, responsible for unsatisfied claims, appealed to the House of Lords.

The nature of the claim/application: the appellants sought to establish indirect sex discrimination under Article 141 EC to enable them to claim redundancy pay and unfair dismissal compensation notwithstanding the statutory age cut-off.

Issues framed by the House of Lords: (i) whether the statutory bar disadvantages a substantially higher proportion of one sex compared to the other; (ii) what the appropriate statistical "pool" and the correct method of comparison are (advantage-led v. disadvantage-led comparisons); and (iii) whether, if disparate impact were shown, the measure could be objectively justified.

Reasoning and conclusions: the Law Lords analysed the proper comparative methodology in light of the Burden of Proof Directive and the Court of Justice's guidance in Seymour-Smith. Several speeches emphasised that the relevant pool is the workforce to which the measure applies and that in the factual matrix of this case an advantage-led comparison (examining proportions of the workforce under 65 who enjoy the rights) shows virtually no disparity between men and women. Other speeches stressed a conceptual point: the statutory cut-off produces age discrimination, and statistics showing more men than women continue working after 65 do not transform age discrimination into sex discrimination. For these reasons the House dismissed the appeals. The court did not need to reach any detailed conclusion on objective justification.

Appeal dismissed. The House held that the statutory exclusion of rights to redundancy pay and compensation for unfair dismissal at age 65 did not amount to indirect sex discrimination under Article 141 EC. The correct statistical comparison (taking the relevant workforce as the pool and using an advantage-led analysis) produced only a negligible disparity between men and women; further, the impugned measure is age-based and the fact that more men than women continue working beyond 65 does not convert age discrimination into sex discrimination.

Employment Tribunal (initial decision in favour of appellants; ET ruled it had jurisdiction and disapplied statutory exclusions) -> Employment Appeal Tribunal (earlier appeal and remittal steps; see Rutherford 1 [2002] ICR 123 and later appeal) -> Employment Appeal Tribunal (Wall J allowed the Secretary of State's appeal on 2 October 2003) -> Court of Appeal [2004] EWCA Civ 1186 (reported [2005] ICR 119) dismissed the appellants' appeal -> House of Lords [2006] UKHL 19 (this judgment).