Hadfield v The Health & Safety Executive & Anor UKEATS/0013/10/BI
Appeal against the decision by the ET to strike out a claim of direct and indirect age discrimination. Appeal dismissed.
The claimant was aged over 60 and, for the relevant period, was still working full time or near full time. The rules of his pension scheme stated, for the relevant period, that, if he worked full time or nearly full time beyond the age of 60, he could not draw his pension. The claimant argued that this put him at a disadvantage compared to people under the age of 60 because his post 60 remuneration for working full time was less than he would have earned at the age of 59, his remuneration being his salary and benefits, less the pension he could have received if he had not been working. The seconf part of his argument was that people wanting to retire younger than 60 would have an actuarial reduction applied to their pension to reflect the number of extra years they would be drawing their pension. The claimant said that his pension should have an upwards actuarial adjustment applied to reflect the fact that he would in effect be claiming for fewer years because he was still working. The ET struck out his claim, holding that the claimant’s position was no different to that of a scheme member who was under 60 years old since neither could draw pension and continue working. Further, since the difference in actuarial adjustment applied only to those who had retired, the claimant had a fundamental problem: he had to have retired to make the comparison that his hypothesis involved. The PCP of which he complained only applied to people who had ceased to be employed.
The EAT agreed. On the issue of direct discrimination, the claimant’s treatment actually showed that a member under the age of 60 was less favourably treated since the nature of the actuarial adjustment was that it was an adjustment downwards. The claimant had also not taken into account that by continuing to work longer, he was accruing more pensionable service and so would receive a higher pension on retirement.
Appeal No. UKEATS/0013/10/BI
EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH, EH3 7HF
At the Tribunal
On 5 November 2010
THE HONOURABLE LADY SMITH (SITTING ALONE)
MR M H HADFIELD (APPELLANT)
(1) THE HEALTH AND SAFETY EXECUTIVE; (2) CABINET OFFICE (RESPONDENTS)
Transcript of Proceedings
For the Appellant
MR M H HADFIELD (The Appellant in Person)
For the Respondents
MR D MURRAY (Solicitor)
Messrs Morton Fraser Solicitors
2 Lister Square
Age Discrimination. Civil Service Pension Scheme. Claim that lack of actuarial adjustment in respect of retiral after age 60 amounted to age discrimination struck out by the Employment Tribunal as having no reasonable prospects of success. Appeal dismissed.**THE HONOURABLE LADY SMITH** **Introduction**
- This is an appeal from a judgment of the Employment Tribunal sitting at Aberdeen, Employment Judge Mr N M Hosie, sitting alone, following a pre hearing review. The judgment was registered on 12 January 2010 and supplementary reasons were registered on 16 June 2010. The part of the judgment that is appealed against was in the following terms:
"The Judgment of the Tribunal is that the claim, in so far it relates to less favourable treatment compared to employees in the Civil Service Pension Scheme who are aged under 60, is dismissed."
- Dismissal was under and in terms of rule 18(7) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004, on the grounds that the claim had no reasonable prospects of success.
- The Claimant represented himself before the Tribunal and before me. The Respondents were represented by Mr D Murray, solicitor, before the Tribunal and before me.
- The Claimant is a member of the Civil Service Pension Scheme ("the Scheme"). He is employed by the Health and Safety Executive and at the time to which his claim relates was working as an Inspector, earning £60,000 per year. His date of birth is 15 August 1946. The essence of his claim is summarized in Annex A to his form ET1 as being:
"… now that I am over 60, I am being treated less favourably than I was when I was 59, and less favourably than other employees who are under 60. This is because I cannot draw my pension while continuing to work with the Civil Service, and there is no actuarial adjustment of pensions deferred till after age 60.
Since turning 60 in August 2006, I have continued to work full time, or near full time, for HSE. However, I am earning far less net remuneration than when I was 59. This is because I could receive my pension if not working at all. My post 60 remuneration for working full time is therefore my salary and benefits LESS the pension I could have had if not working."
- At paragraph 6.2 of his ET1, the Claimant explains that the discrimination of which he complains:
"… is caused by the combined effect of two rules namely, a) Pension cannot be drawn while continuing to work full time in the Civil service, and b) There is no actuarial enhancement of pensions which commence payment later than age 60."
- As regards part b) of the Claimant's complaint, his case is that there is age discrimination because a person who retires at, say, age 59 would have an actuarial adjustment applied to his pension (a reduction to reflect the fact that the pension will be paid for longer) whereas a person who retires at, say, age 60 would not have any actuarial adjustment applied (an enhancement to reflect the fact that the pension will be paid for a shorter period).
- The rules of the Scheme changed in about March 2008 so as to enable a member to work part time after age 60 and draw pension, provided the total of his earnings from employment and pension do not exceed what would have been his earnings if working full time. The Claimant has been working part time and drawing pension since May 2008. His claim of discrimination relates, accordingly, only to a period between August 2006 and May 2008.
- Before and after March 2008, members had the option of retiring earlier than age 60 but subject to actuarial reduction of their pension in the event of exercise of that option. In common with those over 60, they did not have the option of taking that pension and continuing to work (unless they reduced their hours so as to result in a reduction in earnings of at least 20%). Put shortly, during the relevant period, neither members under 60 years nor members over 60 years had the option of drawing pension and continuing to work full time or virtually full time.
- The Claimant claimed that he had suffered both direct and indirect discrimination on grounds of age.
- The Claimant lodged a grievance in respect of his complaint of discrimination. It was responded to by letter of 16 October 2007. His grievance was rejected. He appealed and his appeal was considered by the Second Respondent by means of the Internal Dispute Resolution service of the Civil Service Pensions Division. His appeal was not rejected on 26 March 2008; written reasons were provided. The reasons explained, shortly put, that the Scheme is a statutory scheme which cannot be varied without specific discretionary powers to do so, the rules of the Scheme affected all members who qualified for retirement in the same manner whether under or over 60 years of age, and that the lack of actuarial enhancement of pension post 60 years did not amount to discrimination because since he was still working, the Claimant was accruing further years of pensionable service which would have the effect of increasing his pension.
- The Claimant then complained to the Pension Protection Fund Ombudsman. A senior Complaints Investigator responded to the complaint by letter dated 28 November 2008. He was not certain that the Ombudsman had jurisdiction in the matter but advised that, in any event, he would uphold the complaint. He did not consider that the Claimant had shown less favourable treatment and questioned the methodology that lay behind the Claimant's claim. He pointed out the Claimant's failure, in his comparison between a 59 year old and a 61 year old member, to take account of the earnings that would continue, on his hypothesis, to accrue and that if the member continues working, his salary would increase so resulting in a higher pension on retiral; a member who retired at 60 could, if the Claimant's theory was correct, then complain that he was being discriminated against because the older member would receive a higher pension. Separately, he drew the Claimant's attention to the provisions of Part 1, paragraph 3 of Schedule 2 to the Employment Equality (Age) Regulations 2006 ("the Age Regulations") and advised that it allowed the use of age in actuarial calculations was lawful.
- The Tribunal held a pre hearing review to determine whether or not the Claimant's claim or any part of it should be struck out as having no reasonable prospects of success. The Respondents' position was that the Claimant's claim was wholly misconceived. His position was no different from that of a Scheme member who was under 60 years since neither could draw pension and continue working at the relevant time.
- The Employment Judge noted the background of the Claimant's grievance, appeal and complaint to the Pensions Ombudsman.
- The Employment Judge referred to Regulation 8, Schedule 2 Part 2 of the Age Regulations and noted that it exempted the use of age based actuarial adjustment.
- The Employment Judge had regard to the general rule that discrimination cases should not be struck out except in the clearest of circumstances, under reference to Harvey on Industrial Relations and Employment Law Section T, para 646, a passage which refers to and quotes from Anyanwu v South Bank Students' Union  IRLR 305. He also had regard to Jaffray v Department of Transport  IRLR 688, a case where direct discrimination was conceded and a claim of indirect discrimination had been struck out, the facts and circumstances being that direct and indirect discrimination could not co-exist.
- The Employment Judge concluded that neither the direct nor the indirect discrimination claims had reasonable prospects of success. So far as the former was concerned, the Claimant pointed to no comparator and his approach took no account of the fact that since he had in fact carried on working he would start with a higher pension when he retired. So far as his claim of indirect discrimination was concerned, he concluded that the Claimant had failed to demonstrate that the operation of the Scheme put him at a disadvantage compared to the group of employees who were under the age of 60. Both groups accrued pension benefits whilst working, in the same way. Further, since the difference in actuarial adjustment applied only to those who had retired, the Claimant had a fundamental problem; he had to have retired to make the comparison that his hypothesis involved. The provision, criterion or practice of which he complained (the provision whereby actuarial adjustment only applied to those under 60) only applied to persons who had, in terms of the Scheme, ceased to be employed. The reality was that the Claimant was seeking to be put in a better position and there was no comparative group which was receiving the benefit which he sought. He could not, in short, show that he was at any disadvantage.
- Mr Hadfield stated that his case was not primarily about pensions. It was about employment and remaining in employment after the age of 60 years. His central theme was that when he remained in employment after age 60, he effectively earned less. If he had stopped working at age 60, he could have drawn his pension. The rules of the Scheme prevented him, during the period of his claim, carrying on working full time (or nearly full time) and drawing any pension. When he was aged 60, if he had retired, he would have been entitled to receive a pension of £17,000 per year. That had been lost. If, however, the Scheme had allowed for actuarial enhancement, he would have had a chance of recovering the pension thus lost.
- As his submissions developed, it became evident that so far as direct discrimination was concerned, Mr Hadfield's case was that since actuarial adjustment applied to those under 60 years, it should also have applied to those over 60 years.
- So far as his case of indirect discrimination was concerned, the PCP relied on was that of not paying pension to Scheme members who had reached pensionable age if they were still working full time. It was fundamental to his thinking that members under 60 and over 60 were to be regarded as waiving their right to pension. Then, the group under 60 should be seen as a group who were waiving an actuarially reduced pension but could look forward to a higher pension if they postponed retirement until after age 60. That meant that they would be able to recover their "lost" pension in the margin between the actuarially reduced pension that they would have received and the unreduced pension that they would in fact receive. They had recovery of their loss to look forward to. However, the group aged over 60 who did not retire were waiving a pension that was not actuarially reduced and they would receive no actuarial enhancement on subsequent retiral. Accordingly, they had only the same pension to look forward to. They could not look forward to making up their loss out of their pension. This explanation of the PCP relied on by him, whilst clearly and carefully explained to me, does not appear to have been put before the Employment Judge.
- Mr Hadfield produced some hypothetical calculations to illustrate his submissions.
- Mr Hadfield indicated that the matter of remedy was not straightforward. As he saw it, there were three options. The first was that "they" could have changed the rules regarding actuarial adjustment so as to allow for actuarial enhancement after age 60. The second was that "they" should allow pension to be paid whilst the member was working full time. He recognized that that option could involve having to allow those under 60 years to access pension whilst working full time. His third option was that the First Respondent should recognise that an employee over 60 was losing pension and pay an allowance for having given it up.
- Mr Hadfield's submissions were really a rerun of the argument in support of his claim and, to that extent, could be seen as seeking to show that his claim did have reasonable prospects of success. He did not, however, specifically address the question of whether the Employment Judge erred in his application of the strike out provisions of rule 18.
- For the Respondents, Mr Murray submitted that the Employment Judge had not erred. He had properly had regard to relevant authority. The general rule that discrimination cases ought not to be struck out was not absolute and this case, unlike Anyanwu, was one where there was no disputed fact. He also referred to the cases of BT v Sheridan  IRLR 27 and Melon v Hector Powe Ltd  IRLR 477 in support of a submission that it could not be said that the Employment Judge misunderstood or misapplied the facts. It was open to him to strike out the claim and his discretion ought not to be interfered with.
- Mr Murray submitted that it was evident from the history of the Claimant's complaint, beginning with his grievance, that it had not been easy to tease out exactly what it was. It was, however, plain, in his submission, that his claim was excluded by the operation of Part 1, para 3 and Part 2, para 8 of Schedule 2 to the Age Regulations. Shortly put, the Claimant was plainly looking for actuarial enhancement under the guise of an ill founded age discrimination claim. One only had to look at the three optional remedies suggested to show that the Claimant was seeking to be put in a better position once past 60 years but that did not show that age discrimination had occurred.
- Mr Murray submitted that the Tribunal had not erred in striking out the claim and the appeal should be dismissed.
- Rule 18 of the 2004 Regulations provides that, at a pre hearing review:
"(7) … a chairman or a tribunal may make a judgment or order –
(b) striking out … all or part of any claim … on the grounds that it … has no reasonable prospects of success."
- The Age Regulations provide:
"3 – (1) For the purposes of these Regulations, a person ("A") discriminates against another person ("B") if -
(a) on grounds of B's age, he treats B less favourably than he treats or would treat other persons, or
(b) A applies to B a provision, criterion or practice which he applies or would apply equally to persons not of the same age group as B, but –
(i) which puts or would put persons of the same age group as B at a particular disadvantage when compared with other persons, and
(ii) which puts B at that disadvantage
and A cannot show the treatment or, as the case may be, provision, criterion or practice to be a proportionate means of achieving a legitimate aim."
- In the case of indirect discrimination, the PCP relied on must fall within one of the descriptions of unlawful discrimination set out in Part 2 of the Regulations and not excluded by any provision in the Regulations. Schedule 2, Part 1 applies to pension schemes and paragraph 3 enables the use of certain "rules, practices, actions or decisions" in relation to such a scheme. Further, paragraph 8 of Part 2 of that Schedule provides:
"The use of age criteria in actuarial calculations … for example … any age related benefit commencing before any early retirement pivot age or enhancement of such benefit commencing after any late retirement pivot age."
- The regulations accordingly make it clear that the use of age based actuarial adjustment in calculating pension benefits will not amount to unlawful discrimination. The examples referred to relate to, on the one hand, the use of actuarial calculation in relation to pension benefit payable under reference to age but without actuarial reduction and on the other hand, the use of actuarial calculation in relation to the pension benefit payable under reference to age with actuarial enhancement. They are, however, but examples. They are not the only circumstances to which the generality of paragraph 8 applies.
- Although the Claimant did not expressly approach his submissions on the basis that he was seeking to attack the decision to strike out his claim, I am prepared to approach matters on the basis that he was seeking to show, by his submissions, that his claim had reasonable prospect of success and accordingly, the Employment Judge was wrong to have struck out his claim.
- Turning, in the first place, to his claim of direct discrimination, I cannot accept that it has any prospect of succeeding. Whilst it is true to say that the pension of a member retiring under age 60 was subject to actuarial adjustment and that of a member retiring at age 60 or beyond was not, that does not demonstrate less favourable treatment. On the contrary, at its highest, it shows that the member under 60 years of age is less favourably treated since the nature of the actuarial adjustment was that it was an adjustment downwards. The treatment being, however, on account of an age based actuarial adjustment, it cannot amount to unlawful discrimination given the provisions of Schedule 2 to the Age Regulations to which I refer above. In any event, the Claimant's claim is based on a false hypothesis. He had not retired during the period of his claim. It is simply not relevant to consider what would have been the position if he had done so. Nor does his approach take any account of the fact that by continuing to work, he has continued to accrue pensionable service and, accordingly, the pension he receives will be higher than that which would have been payable to a younger member of the Scheme whether under or over the age of 60.
- As regards the case of indirect discrimination, the Claimant's approach is imaginative but it is also, in my view, misconceived. The PCP on which he relies applies to both age groups. Neither can carry on working full time and draw pension. To suggest that one group is better off because of the ability to look forward to hypothetical recovery of lost pension is not a tenable basis for his claim. There is no loss of pension because no entitlement to pension arises until retirement. Further, even if Mr Hadfield is correct in his approach, he had the benefit of being able to look forward to recovery of lost pension when he was under 60 years of age himself. He cannot now argue that he is at a disadvantage. In any event, in common with his claim of direct discrimination, his claim is irrelevant because the PCP on which he relies, being based on age related actuarial adjustment, is not unlawful under the Age Regulations.
- Overall, I consider that the Tribunal was entitled to accept Mr Murray's argument that what lay at the heart of the Claimant's claim was that he sought actuarial enhancement of his pension and that could not be relevantly presented as a case of age discrimination.
- In all the circumstances, I am satisfied that the Employment Judge did not err in deciding to strike out his claim insofar as based on a comparison with members of the Scheme under 60 years of age and I will pronounce an order dismissing the appeal.
Published: 20/01/2011 16:17