Justifying Retirement

In 2006 regulations were introduced into English law which outlawed age discrimination in certain circumstances.  However, they also said that an act would not amount to direct (or indeed indirect) age discrimination if it was “a proportionate means of achieving a legitimate aim”. 

The current UK Act which deals with all forms of discrimination including age is the Equality Act 2010.  This contains similar wording to the above regulations.

The original rules allowed employers to retire employees at a default retirement age of 65 or over.  However, this provision was repealed in April 2011.  Therefore, compulsory retirement of any employee now amounts to direct age discrimination unless it is objectively justified. 

An important case on this issue has recently been reported.  It relates to a partner in a firm of solicitors who was compulsorily retired at the end of 2006, the year of his 65th birthday.  (The default retirement age never applied to partners).

In that case, Mr Seldon, a partner in Clarkson Wright & Jakes, was compulsorily retired on 31st December 2006 as provided by the partnership deed.  Mr Seldon wanted to continue working for the firm but his request was rejected. After his retirement, he issued Employment Tribunal proceedings arguing that he had been directly discriminated against on grounds of age.

The tribunal held that compulsory retirement in these circumstances was a proportionate means of achieving legitimate aims. The aims identified were:

i.  Retaining associates by being able to offer them the opportunity of partnership after a reasonable period;

ii. Facilitating workforce planning with realistic expectations as to when vacancies would arise;

iii. Contributing to a congenial and supportive workplace culture by limiting expulsion of partners through performance management.

It went on to find that his retirement was objectively justified.

Mr Seldon appealed to the Employment Appeal Tribunal which upheld part of his argument.  It was then appealed again to the Court of Appeal and subsequently to the Supreme Court which has recently delivered its judgement.

One of the judges, Lady Hale gave some general guidance about when direct age discrimination in this context may be legitimate.  She said that in order to justify direct age discrimination, the legitimate aims identified must be “social policy objectives” and not simply reasons particular to an individual employer’s situation.  This means that they must be objectives with an element of public interest and be consistent with the social policy aims of the State.

She identified two different kinds of legitimate objective:

Inter-generational Fairness – this can mean a variety of things, including facilitating access to employment by young people or, by contrast, enabling older people to remain in the workforce. 

Dignity – this includes preventing the need to dismiss older workers on the grounds of underperformance, thus preserving their dignity and avoiding humiliation together with costly and divisive disputes.

Consequently, Clarkson, Wright and Jake’s aims behind its compulsory retirement age were legitimate.  However, the next question was whether retirement at 65 was “appropriate and necessary”.  In order to decide this in light of the judgement, the matter was referred back to the Employment Tribunal to decide whether that particular age was legitimate in these circumstances.

Although this decision appears to allow companies to re-introduce compulsory retirement ages, it does not clarify whether a particular age would be acceptable in any given circumstance.  This will depend on the facts of each individual case. It is also quite possible that no retirement age will be acceptable if the employer cannot identify a legitimate aim.

No doubt further guidance will be forthcoming in the numerous cases that are bound to follow over the next few years.  However, in the meantime, employers will have to be very careful about taking any steps to retire older workers and no decision should be made without taking legal advice.