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13 June 2013

Retirement and age discrimination

An employment tribunal has recently decided a long-running case concerning a law firm’s compulsory retirement of one of its partners at the age of 65.

Last year, the Supreme Court handed down its ruling in the case of Seldon v Clarkson, Wright and Jakes, finding that the law firm had pursued legitimate aims in enforcing the retirement of one of its partners at the age of 65.  The legitimate aims were identified as being workforce planning and staff retention.

The case was remitted to an employment tribunal to determine whether the chosen retirement age of 65 was a proportionate means of achieving those legitimate aims.   In other words, was the retirement age of 65 objectively justified?

Decision

The tribunal once again rejected Mr Seldon’s claim for direct age discrimination, finding that the compulsory retirement age of 65 was both appropriate and reasonably necessary for the achievement of the legitimate aims of workforce planning and staff retention.

Whilst the partnership might have chosen a higher compulsory retirement age, it could not be so high that it discouraged associates from joining the firm, nor too low that partners were forced to retire before the end of their careers and work elsewhere.  The tribunal considered that only a narrow range of ages (64 to 66) could achieve the necessary balance.

In addition, it took into account the following factors in reaching its decision:

  • All the partners had consented to the retirement age when they signed up to the partnership deed and were considered to be in an equal bargaining position;
  • The statutory retirement age of 65 applicable to employees, repealed in 2011 but still in force at the time of the original proceedings, was an important factor in assessing the choice of 65 for the retirement of partners during that period;
  • The firm’s mandatory retirement age coincided with the state pension age of 65;
  • The European Court of Justice has upheld a retirement age of 65 in a number of cases;
  • The ‘collegiality’ aim of having a congenial and supportive workplace culture by limiting the expulsion of partners through performance management was accepted as a factor alongside the aims of retention and planning.

The tribunal was satisfied that the retirement age was proportionate and was therefore objectively justified.  However, it commented that the position might be different if the retirement date had fallen after the abolition of the default retirement age for employees, and in light of the government’s planned changes to the state pension age.

Comment

This decision should be treated with caution by employers (and partnerships), since the tribunal was making its decision on the basis of factors that applied at the date of Mr Seldon’s retirement in 2006.  However, the case demonstrates a willingness on the part of employment tribunals to accept a compulsory retirement age in certain circumstances and it provides a good illustration of the factors likely to be taken into account by a tribunal when considering the issue of justification.