Two recent decisions of the Supreme Court Seldon (Appellant) v Clarkson Wright and Jakes (A Partnership) (Respondent) [2012] UKSC 16 (“Seldon”) and Homer v Chief Constable of West Yorkshire Police [2012] UKSC 15 (“Homer”) provide useful guidance on the approach to take when justifying retirement of employees at a particular age. This guidance goes some way towards dispelling the confusion caused by the abolition of the default retirement age (“DRA”) last October.

Seldon v Clarkson

In Seldon the Supreme Court held that the firm could justify having a partnership deed which provided for the compulsory retirement of partners upon reaching age 65 notwithstanding this constituted direct discrimination of persons over 65.

To show justification the law firm had to show that the discriminatory treatment was a proportionate means of achieving a legitimate aim.  The aim need not have been in contemplation at the time the measure was put in place.

The Court accepted that the law firm could justify the provision on the grounds that:

  1. it permitted succession planning (which encouraged younger associates to have an expectation of partnership); and
  2. it avoided undignified exits for partners on the grounds of performance.

It also set out a number of additional potentially legitimate aims:

  • promoting access to employment for younger people;
  • the efficient planning of the departure and recruitment of staff;
  • sharing out employment opportunities fairly between the generations;
  • ensuring a mix of generations of staff so as to promote the exchange of experience and new ideas;
  • rewarding experience;
  • cushioning the blow for long serving employees who may find it hard to find new employment if dismissed;
  • facilitating the participation of older workers in the workforce;
  • avoiding the need to dismiss employees on the ground that they are no longer capable of doing the job which may be humiliating for the employee concerned; or avoiding disputes about the employee’s fitness for work over a certain age.

Homer v WYP

In Homer, an ex-police officer (who had worked as a legal adviser for the Police National Legal Database (“PNLD”)) claimed he had been disadvantaged by a new career structure which set nine criteria for entry to the top grade, one of which was that employees hold a law degree.

As Mr Homer was aged 61 he could not have acquired a law degree prior to his mandatory retirement at 65.  This meant he could never achieve the highest grade and would only be eligible for a pension assessed at a lower salary.

The Supreme Court reversed the finding of the Court of Appeal that the barrier to the claimant’s progression was not his age but his impending retirement which did not allow enough time for him to obtain the necessary qualifications. The Supreme Court, conversely, decided that age and retirement amounted to the same thing. The requirement for a law degree was therefore indirectly discriminatory and fell to be objectively justified.

In the case of indirect discrimination, the Court declared that the range of aims which can objectively justify a provision is wider than those capable of justifying direct discrimination.

The Supreme Court accepted that the aim of requiring a law degree was to facilitate the recruitment and retention of staff of appropriate calibre, both of which were legitimate aims. However the Court remitted the question of whether or not this was proportionate back to the Employment Tribunal.

Three questions need to be considered when determining proportionality:

  1. Is the objective sufficiently important to justify limiting a fundamental right?
  2. Is the measure rationally connected to the objective?
  3. Are the means chosen no more than is necessary to accomplish the objective?

To be proportionate, a measure has to be both an appropriate means of achieving the legitimate aim and reasonably necessary to the achievement of that aim. A measure may be appropriate to the achievement of the aim but go further than necessary to achieve it and thus be disproportionate.

The employer should also consider the impact of any criterion upon the affected group and weight his against the importance of the aim to the employer. This should involve considering any less or non-discriminatory alternatives available.  For instance, could the PNLD have safeguarded the interests of existing employees by introducing the provision for new recruits only and still achieve its aims.

Going Forward

In light of the abolition of the DRA and following the judicial guidance now available, employers should review and consider the justification for any age specific provisions or practices.  Typically these occur in early retirement schemes, share option schemes, insured benefits and pension entitlements. Companies should also scrutinise their recruitment and retention criteria which are vulnerable to discrimination based claims.