The financial cost to a private employer of avoiding an indirectly discriminatory provision will not, on its own, be a good enough justification.

Facts

The financial cost to a private employer of avoiding an indirectly discriminatory provision will not, on its own, be a good enough justification. Cost will only be accepted as justifying discrimination were it is one of a number of other justifying factors.

Prior to 1971, British Airways set different contractual retirement ages for its male and female employees. Men could work until they were 60, whereas women had to retire at 35. These contractual retirement ages were subsequently standardised at 55, though men employed prior to 1971 were allowed to retain their later retirement age of 60.

A female employee complained that it was sex discrimination to require her to retire at 55 when some of her male colleagues could continue until 60. The Tribunal found that there was a potentially discriminatory provision, criterion or practice – that in order to continue working until 60, an individual had to have been employed prior to 1971 - and that, statistically, this had an adverse impact on more women than men.

Decision

However, the woman’s claim failed because the Tribunal held that BA could justify the indirectly discriminatory effect. Justification requires an objective balance between the discriminatory effect of the condition on the employee and the reasonable needs of the employer. BA argued that its ‘economic and organisation business interests’, which were to minimise costs and maintain the existing terms and conditions of employment relating to retirement and access to pensions, were legitimate and that retaining discriminatory retirement ages was a proportionate way of achieving their aim. Both the tribunal and the Employment Appeal Tribunal agreed.

The claimant’s argument that cost could never be a justification for discriminatory treatment was rejected. The EAT drew a distinction between the government, ‘with its notionally bottomless purse’, which can never be allowed to justify its own discriminatory conduct on grounds of cost and private employers which do not have unlimited resources. In the EAT’s view ‘as a matter of common sense’ and based on ECJ and other case law ‘economic justification such as the saving, or non-expenditure of costs … must be considered’. In their view, private employers can put cost forward as a justification, but not on its own. There must be other justifying factors.
(NB This case was appealed to the Court of Appeal on other grounds.)

Implications

The issue of whether, and if so to what extent, cost can be used as a justification for age discrimination is likely to be one of the most important questions for courts and tribunals. It seems quite clear that costs alone will not be enough, but this case will be used by any private employer seeking to argue it as one of a number of factors.

The judgment is available here.

Cross and others v British Airways plc (EAT), 23.3.05.