In the latest, and what we can now assume is the last, chapter in the long runningSeldon case concerning compulsory retirement, the Employment Appeal Tribunal (EAT) has upheld the Tribunal’s decision that compulsory retirement, in this case involving a partner in a law firm, was justified.
Forced retirement is a form of direct age discrimination, which will only be lawful if it is objectively justified ie if it is a proportionate means of achieving a legitimate aim. Just when appropriate justification arises is a question with which the Seldon litigation was concerned. The case involved a partner, rather than an employee. Whilst the default retirement age of 65 (which was abolished in 2011) never applied to partners (as they are not “employees”), they are nonetheless protected by equality legislation.
The case was originally pursued all the way to the Supreme Court, with Mr Seldon having little success along the way. The Supreme Court accepted that the firm did have legitimate aims for its retirement policy, namely:
- 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 (the retention aim);
- Facilitating the planning of the partnership and workforce across individual departments by having a realistic long term expectation as to when vacancies will arise (the planning aim); and
- Limiting the need to expel partners by way of performance management, thus contributing to the congenial and supportive culture in the firm (the congeniality/collegiality aim).
However, the Supreme Court declined to decide whether the retirement age of 65 was a proportionate means of achieving the legitimate aims identified. Instead, it referred this issue back to the Tribunal to determine.
The Tribunal held that whilst the firm could have chosen a retirement age that was higher than 65, and which would have had less of a discriminatory effect on Mr Seldon and other partners, this did not mean that the selection of 65 was unjustifiable. The Tribunal conducted a balancing exercise in which it considered the legitimate aims of retention and planning and concluded that the retirement age chosen was a proportionate means of achieving those aims. In reaching this conclusion, the Tribunal held that only a narrow range of ages (64-66) could achieve the necessary balance. It took into account the fact that all the partners at the firm (including Mr Seldon) had consented to the retirement age in the partnership deed, that the default retirement age at the time was 65 and that it coincided with the state pension age. In addition it noted that the EU Court of Justice has, in a variety of cases, upheld a mandatory retirement age of 65. Finally, the Tribunal considered Lady Hale’s comments in the Supreme Court decision with regard of the collegiality aim, in that she said that a Tribunal was entitled to take this into account as a legitimate aim and that mandatory retirement is a means by which this could be achieved.
Mr Seldon appealed, once again, to the EAT. His main ground of appeal focussed on the fact that the Tribunal had acknowledged that the firm could have achieved its aims with a slightly later (and therefore less discriminatory) retirement date. He argued that it could not, therefore, be said that a retirement age of 65 was reasonably necessary.
Mr Seldon’s appeal failed, the EAT ruling that the fact that a higher retirement age would have achieved the firm’s aims did not mean the choice of 65 could not be justified. The issue for a tribunal is to determine where a balance lies between the discriminatory effect of choosing a retirement age, and the achievement of the legitimate aims. This balancing exercise did not need to demonstrate that a specific age was any more or less appropriate than some other age.
Whilst the Employment Tribunal acknowledged that the outcome of Mr Seldon’s claim might have been different if he had brought his claim after the abolition of the default retirement age, that does not mean that an employer is now unable to justify a mandatory retirement age.
Many employers may take comfort in the fact that retention and workforce planning were considered legitimate aims which could be achieved by a compulsory retirement age. However, any objective justification for a mandatory retirement age will depend on the nature of the organisation, and it is important to bear in mind that this particular case concerned a retirement in the context of a professional services partnership deed. There are differences between the way partnerships are run and a traditional employment relationship and for these reasons the basis of the justification in this case may not always read across to employment.
Please click here to view the Judgment in Seldon v Clarkson Wright & Jakes UKEAT/0434/13.