Over the course of their 85 year history, Danish toymakers Lego have seen their humble building block set the foundations for an entertainment empire encompassing video games and the movie industry. Some eight months ago, they hired 61 year old Bail Padda as their first non-Danish chief executive. Now Lego have announced that they will look to a younger man to bring their famous bricks to the next generation of builders.
In an interview with Lego’s chairman the Financial Times observed that the decision to replace Mr Padda was not related to his performance, but was “due to Mr Padda’s age and the realisation he could only do the job for a few years at most”. His replacement, Niels Christiansen, is 51 years old.
Before implementing a similar strategy, companies in Northern Ireland should carefully consider the potential risks of age discrimination and unfair dismissal.
Age discrimination is defined as when one employee received less favourable treatment than another on the grounds of age (“direct discrimination”), or where an employee is placed at a particular disadvantage by the implementation of a provision, criterion or practice which is applied across all age groups (“indirect discrimination”).
The ECHR Code highlights what will constitute discrimination. This includes an employer’s application of stereotypes by assuming that an employee is less competent or reliable due to their age. Age discrimination is however unique in that even direct discrimination can be permissible if the employer can objectively justify its use, for reasons such as “legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary“. Similarly, indirect discrimination can be permitted if it is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.
Drawing on decisions of the Supreme Court and the European Court of Justice, the ECHR Supplemental Code defines “legitimate aims” as those promoting inter-generational fairness and dignity. These include sharing out opportunity, rewarding experience and efficient planning. The need to show objective justification is especially true with a compulsory retirement dismissal.
Where an age related dismissal can be justified, the statutory dismissal procedure should still be followed. This includes following a fair procedure, with adequate notice, consultation and the opportunity to appeal. The dismissal must be for a fair reason, such as conduct, capacity or in the case of compulsory retirement, “some other substantial reason”.
In the case of Lego, it was clear to both parties that Bail Padda was always intended as a short-term solution during the search for a permanent appointee. Given the potential issues, an employer in such circumstances may wish to consider an experienced hire on a fixed term contract. This allows time for recruitment whilst avoiding the need to dismiss once an ideal candidate is found. Age discrimination, retirement and fair dismissals are complex and changing legal areas, and unlike Lego, there is no instruction manual. If you have concerns, you should seek professional advice.
While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.
