Did you know that compulsory retirement is unlawful in Australia? The Age Discrimination Act 2004 (Cth) makes it unlawful to discriminate on the basis of age in employment. This includes when making decisions about recruitment, promotions and termination of employment. Accordingly, an employer cannot impose a retirement age or treat an employee less favourably on the basis of their age.

In a recent appeal case before the Federal Court of Australia (“FCA”) an employee who was awarded $20,000 after suffering age discrimination has had their compensation increased to $90,000 with the FCA describing the initial award of $20,000 as “manifestly inadequate”. The FCA has also signalled a possible additional payment of $142,000 for economic loss.

This reassessment of damages signals the seriousness with which the FCA handles discrimination cases and the significant compensation that can be awarded.

What happened?

The employee had worked for the organisation for 25 years and was nearing the age of 65. In early 2018 the Managing Director of the organisation informed the employee that the organisation had a retirement age of 65, and asked about the employee’s plans to retire. The employee initially did not provide a clear timeline and stated that he would provide the organisation with three months’ notice of his retirement.

Shortly after, the organisation hired a new employee to eventually replace the employee, and asked the employee to explain his role to the new employee. As a result, the employee felt compelled to provide a date for his retirement, and committed to July 2019.

In around July 2018, the employee was informed that his current employment contract would come to an end on 31 December 2018, and that he would be engaged on a new fixed-term contract from 1 January 2019 for the purposes of training the new employee to perform his role.

The employee considered this to be a repudiation of his contract and claimed that he had been constructively dismissed. From this time, the employee’s health deteriorated rapidly because of workplace stress.

The employee commenced proceedings, where he sought a payment of $300,000 as general damages for pain and suffering, and $142,000 for economic loss, being the amount he would have earned had he remained employed as planned.

Damages increased

While the employee was initially awarded $20,000, the FCA considered that regard must be had to what can fairly be seen as reasonable compensation for the injuries which the employee has suffered, not the manner in which the harm was caused. What is relevant when determining the quantum of damages is the impact of the discrimination on the employee, not the conduct of the organisation.

There was undisputed medical evidence of the impact on the employee, which included adjustment disorder, depression and anxiety. These conditions had caused the employee to suffer considerable loss of amenity of life and an inability to work. Accordingly, higher compensation was justified in the circumstances.

The FCA also assessed the injuries suffered by the employee against the landmark case of Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC (“Oracle”). Although Oracle was a sexual harassment case, and the FCA acknowledged that “there is necessarily an element of imprecision in the analysis”, the FCA awarded the employee a similar amount for general damages (being $90,000, with $100,000 being awarded for general damages in Oracle).