Corporate Pensioners in Age Discrimination Test Case

Corporate pensioners often feel that they are given a raw deal when compared to active employees and, in an important test case, employment tribunals are being asked to consider whether such alleged differences in treatment can amount to unlawful age discrimination.

A multinational company had faced industrial action after it decided to link employee pension increases to the Consumer Price Index, rather than the more generous Retail Prices Index as it had done hitherto. In order to resolve the dispute, the company paid lump sums to current employees, but not to those who had already retired.

A group of pensioners argued before an Employment Tribunal (ET) that the failure to pay them the same lump sums as active employees amounted to age discrimination, banned by the Equality Act 2010. Following a preliminary hearing, the ET accepted that it had jurisdiction to consider their complaints.

In overturning that ruling, however, the Employment Appeal Tribunal (EAT) found that the ET had applied the wrong legal test. The ET had failed to ask itself, in accordance with Section 108(1) of the Act, whether the alleged difference in treatment arose out of and was closely connected to the employment relationship which formerly existed between the pensioners and the company.

The ET had also failed to consider whether the allegations of discrimination were of conduct which would have contravened the Act had it occurred during the employment relationship. In those circumstances, the jurisdictional issue was sent back to a freshly constituted ET for reconsideration.