The Employment Tribunal (ET) has judged that compulsory retirement might still be justified in some circumstances.
On 30 May the ET ruled on the Leslie Seldon case which was brought because Seldon was required to retire at age 65 from the partnership of the law firm Clarkson Wright and James.
At the time of Seldon’s retirement, the default retirement age of 65 applied to employees, but not to partners.
Employers that wish to retire employees at a particular age are now required to justify the policy as a ‘proportionate means of achieving a legitimate aim’.
The circumstances that Clarkson Wright and James gave for retiring Seldon were:
- Ensuring that associates would have an opportunity to attain partnership within a reasonable time, to help retention.
- Facilitating workforce planning.
- Limiting the need to expel partners by way of performance management, thus contributing to a collegiate culture.
In April 2012, the Supreme Court held that these aims were legitimate, but that the tribunal had not considered whether the mandatory retirement age of 65 was an appropriate means of achieving aims. It was on this point that the case was sent back to the tribunal.
The tribunal has now ruled that retirement at age 65 was a proportionate means of achieving the legitimate aims and Seldon’s age discrimination claim failed.
Jonathan Exten-Wright, a partner in DLA Piper’s employment, pensions and benefits team, said: “This is good news for employers that either have retained a compulsory retirement age following the abolition of the default retirement age, or may wish to impose one in the future.
“However, careful consideration still needs to be given to the selected age and to the objective justification for the continued use of a retirement age.”
Crowley Woodford, a partner in Ashurt’s employment, incentives and pensions group (pictured), added: “The tribunal’s decision that 65 was a proportionate means of achieving the partnership’s legitimate aims of succession planning and retention and recruitment of associates is made on the basis that, at the relevant time, 65 was the default retirement age.
“The judgement specifically leaves open the question of what is proportionate now that there is no default retirement age, saying that the position might be different if the relevant date had been made after the abolition of the default retirement age and planned changes in the state pension age.”
The ET took into account that Seldon’s retirement occurred at a time when retirement of employees at that age was permissible under the law. The ET specifically stated that the position might be different if the relevant date had been after the abolition of the default retirement age.
As such, the ET’s decision is less helpful than it might have been, as this reasoning will not apply to any compulsory retirements now. It clearly also raises a challenge for employers to consider carefully whether 65 is indeed the appropriate age in their particular circumstances.
Further, the case concerns a retirement in the context of a professional services partnership deed and therefore the aims upheld by the Court should be viewed in that context. There are differences between the way partnerships are run and a traditional employment relationship. For these reasons, the aims justified in this case may not always read across to employment.
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