Compulsory Retirement Age Not Discriminatory

Sun, 28 Nov 2010

In Seldon v Clarkson, Wright and Jakes [2010] IRLR 865 the Court of Appeal confirms that a firm of solicitors was justified in requiring one of its partners to retire at the age of 65 in accordance with the terms of its partnership deed. The case is to go to the Supreme Court. 
 
The facts of Seldon are quite well known: S, a solicitor and equity partner, challenged the partnership’s decision to retire him at the age of 65 in accordance with the terms of its partnership deed. S complained of direct discrimination contrary to Regulation 3(1)(a) of the Employment Equality (Age) Regulation 2006. The firm succeeded in part in justifying its policy pursuant to Regulation 3(1) of the Age Regulations. In particular it relied on the need to ensure that associates were given the opportunity of partnership after a reasonable period, facilitating the planning of the partnership and workforce across individual departments by having a realistic long term expectation as to when vacancies would arise and, more controversially, that retirement at 65 fostered an atmosphere of congeniality in that it avoided the need to take steps to remove those who, at 65 or over, were underperforming. It is fair to say that the Court of Appeal was even more receptive to both of these arguments than the EAT had been. 
 
In giving its judgment the Court of Appeal ruled that in seeking to justify age discrimination, an employer is not restricted to the social policy aims which had led the Government to originally impose an upper age limit of 65 (now to be found in Schedule 9 paragraph 8 to the Equality Act 2010), although it was open (where appropriate)for an employers policy to mirror those aims. The Court therefore held that the aim of providing employment prospects for young persons by holding out good promotion prospects was a legitimate aim as was the more controversial aim of ensuring a collegiate culture which the Court describes as an aim to produce a “happy workplace”. Furthermore, in considering the “proportionality” of the means chosen to implements these aims, the Court accepted that the age of 65 chosen in the present case was a proportionate means of ensuring that associates had promotion prospects which the Court of Appeal appears to have considered the firm’s primary aim. Indeed the Court opined that once the clause or rule was justified in itself, its application needs little justification. It certainly did not require the firm to show that an associate was to be promoted into the “vacancy” left by S’s departure. The Employment Tribunal therefore had not erred in focussing on the justification of the clause as opposed to its application. The Court also accepted that the Employment Tribunal was justified in taking account of the fact that the parties were of equal bargain power and S had agreed to this retirement date when he signed the partnership deed.
 
Despite the Court of Appeal’s robust judgment, further guidance can be expected from the Supreme Court next year. Furthermore, this is an issue which will not go away in the light of the Government’s decision to remove the upper age limit with effect from 1 October 2011. It will then be open to all employees, not just partners of law firms, to challenge their compulsory retirement on grounds of age and it will then be for employers to justify their retirement policies in respect of different categories of workers.
 

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