Compulsory Retirement and Age Discrimination– Seldon again!

You may recall our article in May 2012 about the case of Mr Seldon, a partner in a Kent law firm. In that article we reported on the Supreme Court’s decision to reject Mr Seldon’s argument that by being forced to retire as a partner in his firm when he reached the age of 65, he was being discriminated against on the grounds of age. The Supreme Court held that it may be possible to show that compulsory retirement was a proportionate means of achieving a legitimate aim, and thus not amount to age discrimination. They referred the case back to the Employment Tribunal to determine whether, on the facts, this was the case.

As set out in our previous article, the following 3 aims had been put forward as legitimate:

1. Ensuring that associates were given the opportunity for partnership after a reasonable period as an associate, thereby ensuring that associates do not leave the firm;
2. Facilitating long term planning by creating a reasonable expectation of when vacancies will arise; and
3. Limiting the need to expel partners by way of performance management, thus contributing to a ‘congenial and supportive’ culture in the firm.

The Supreme Court said that in order to justify direct discrimination, the ‘legitimate aim’ relied upon must be a social policy objective and have a public interest, not just something relevant to a private business, such as preserving profits. For example, a legitimate aim may be the need for “intergenerational fairness”, i.e. the importance of giving the younger generation an opportunity to progress through the ranks. Using this test, the Supreme Court confirmed that all 3 were capable of amounting to legitimate aims and therefore could be used to justify compulsory retirement.

However, the key question was whether the retirement of partners (and Mr Seldon in particular) at age 65 was a proportionate means of achieving those aims. This was the question which was remitted to the Employment Tribunal for consideration. One of the things the Tribunal has been ordered to take into account was that at the time when Mr Seldon was retired, the default retirement age still applied so that employees (as opposed to partners) could be forced to retire at 65.

The Employment Tribunal have now considered Mr Seldon’s case in light of the directions from the Supreme Court, and held that his compulsory retirement was justifiable and therefore his claim of age discrimination failed. It held that retention and business planning were legitimate aims, that collegiality could also be a legitimate aim.

It is important for employers to realise that this case does not give a green light for employers to impose mandatory retirement ages.  First, each case will depend on its own fact. Second, and probably more importantly, this case was decided based on social policy and demographics in 2006 which was before the abolition of the national retirement age for employees. That situation has obviously moved on in the last 7 years, and the Employment Tribunal expressly stated that that the case might be decided differently if the same facts arose today.  In our view, in the vast majority of businesses, it would be a brave employer who tried to impose a mandatory retirement age.

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.