The eagerly awaited Supreme Court judgment in Seldon v Clarkson Wright and Jakes has just been published. The judgment provides some guidance on how employers can justify dismissing older workers, and distinguishes between objective justification tests for direct and indirect age discrimination.

What is the background to the case?

Mr Seldon was a partner at law firm, Clarkson Wright and Jakes. The partnership deed required partners to leave the firm once they had reached age 65. At the time, this was consistent with the contractual retirement age of employees in the firm.

Mr Seldon reached age 65 and sought to remain with the firm; the other partners did not agree. In the same year the Employment Equality (Age) Regulations 2006 (the "Age Regulations") came into force (since superseded by the Equality Act 2010).  

Mr Seldon and the partners failed to reach agreement and he ceased to be a partner of the firm. He brought a claim of direct age discrimination because he had been forced to retire. This was not disputed by the firm; the various court proceedings instead focussed on whether the treatment could be justified: the test being whether his treatment was a proportionate means of achieving a legitimate aim.  

At the time that Mr Seldon brought his claim, it was possible for employers to rely on the default retirement age provisions in the Age Regulations to fairly dismiss employees. These provisions did not cover the position for partners. Now that the default retirement age (and accompanying provisions) has been removed, the decision is relevant both to partners and to all employees where the employer seeks to impose a contractual retirement age.

The main issues before the Supreme Court were firstly, the type of policy considerations that can justify direct age discrimination and secondly, how the considerations apply to an individual.

In reaching its decision, it took into account:  

  • The Employment Tribunal (which found that Mr Seldon's retirement age was a proportionate means of achieving three (out of six) of the firm's stated legitimate aims).
  • The Employment Appeal Tribunal (which found that the Employment Tribunal had failed to consider whether the accepted legitimate aims could have been met by a retirement age other than 65).
  • The Court of Appeal (which dismissed Mr Seldon's appeal).

The Supreme Court concluded that:

  • Case law has developed since the original Employment Tribunal decision. In light of subsequent European decisions, a distinction should be drawn between direct and indirect age discrimination (even though under English law both forms have the potential to be objectively justified).
  • An employer's legitimate aim for an act of direct age discrimination (for example, a contractual retirement age) must have some public interest basis and be consistent with the State's social policy aims. The aims cannot be purely individual to an employer's situation (for example, cost cutting or improving competitiveness).
  • The public interest rationale must also be relevant to that employer. The Court used the example of an employer relying on retiring an employee as a means of avoiding performance management where this was not really an issue for them (i.e. it already used sophisticated performance management measures). This would not be a legitimate aim for that employer.
  • Even if the aim has a public interest nature, is consistent with the State's social policy aims and is applicable to that employer, the means of achieving that aim must be appropriate to that aim and reasonably necessary (i.e. proportionality).

On this basis, Mr Seldon's appeal was dismissed on all counts and remitted back to the Employment Tribunal to determine whether the firm could have met the legitimate aims in another way. The final outcome will depend on whether the means to achieve the aims were proportionate.