UK Supreme Court Rules on Compulsory Retirement Ages

Peninsula Team

May 18 2012

A recent Supreme Court judgment has provided significant guidance on the objective justification of compulsory retirement ages. This hot topic will be heard more and more frequently by tribunals since the abolition of the default retirement age means that employers can no longer follow the statutory retirement procedure to force employees to retire. Objective justification is now the only route an employer can take to dismiss employees upon reaching their retirement age. The case in question, Seldon v Clarkson Wright and Jakes, suggests that a compulsory retirement age can be capable of being objectively justified, but in limited circumstances. The case centres on the compulsory retirement of a partner in a firm of solicitors, Mr Seldon, at the age of 65. He claimed that this treatment was age discrimination. The retirement age clearly constituted direct age discrimination, however, it was open for Clarkson Wright and Jakes (CWJ) to show that the measure was objectively justified. Therefore, they had to show that they had a legitimate aim, and that the retirement age was a proportionate means of achieving that aim. CWJ put forward 6 aims, of which the Court found that they did actually hold 3: • Ensuring that associates are given the opportunity of partnership after a reasonable period as an associate, thereby ensuring that associates do not leave the firm (i.e. staff retention); • Facilitating the planning of the partnership and workforce across individual departments by having a realistic long term expectation as to when vacancies will arise (i.e. workforce planning); • Limiting the need to expel partners by way of performance management, thus contributing to a congenial and supportive culture in their firm. The Court found that these aims were capable of being legitimate because they were consistent with the social policy/public interest aims of the state: ‘inter-generational fairness’ and ‘dignity’, and can be related to the particular aims of the business concerned. However, the case has been remitted to the Employment Tribunal to consider whether the choice of a compulsory age specifically of 65 was proportionate. Required criteria for objective justification The tests required to show that direct age discrimination is objectively justified are now clarified: Legitimate Aim The employer must have an aim. The aim must be the actual aim, although it does not matter if the aim was not articulated or even realised at the time the measure was adopted. The aim must be legitimate in the particular circumstances of the case. For example, improving the recruitment of younger people is in principle a legitimate aim. But if there is in fact no problem in recruiting young people and the problem lies in retaining the older and more experienced workers then it may not be a legitimate aim for the business concerned. Avoiding the need for performance management may be a legitimate aim, but if in fact the business already has sophisticated performance management procedures in place, it may not be a legitimate aim to avoid them for only one section of the workforce. Aims must be legitimate with reference to public interest. Aims relating only to the individual aims of the business e.g. cost reduction and improving competitiveness, are generally not legitimate. Proportionality The means chosen (i.e. the compulsory retirement age) must be an appropriate and necessary way of achieving the aim. It is one thing to say that the aim is to achieve a balanced and diverse workforce. It is another thing to say that a compulsory retirement age of 65 is proportionate means of achieving that aim because there may have been another non-discriminatory measure which would have achieved the same aim. For any further information, please call our 24 Hour Advice Service on 0844 892 2772.  

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