Wouldn't it be helpful if there was a case on whether a retirement age of 65 could be justified? Yes, said Orpington law firm, Clarkson Wright & Jakes, and I'll tell you what we'll do! We'll retire a partner who has reached 65 and we'll see how it goes (as you know, being the clever people that you are, the current rules for employee retirement don't apply to partners in a partnership). We will even see if we can get the matter as high as the Court of Appeal and we will call it Seldon v Clarkson Wright & Jakes. This conversation of course did not happen but … the case did.
Seldon was compulsorily retired from the partnership at the end of the year in which he reached 65, in accordance with the partnership deed. Seldon didn't want to be retired and brought a claim that he had been discriminated against on grounds of his age. In order to successfully defend the claim Clarkson Wright & Jakes needed to show that their firm's retirement age of 65 was a proportionate means of achieving a legitimate aim. They succeeded in doing this despite Seldon putting across a number of interesting points:
- The Court of Appeal found that the retirement age could be justified by a legitimate aim other than the one that was had in mind when the rule was first introduced. That is to say, that the employer only had to justify the measure at the time of the alleged discrimination not at the time when the measure was implemented.
- The aim of producing a happy workplace and allowing people to retire with dignity (rather than being performance managed out) appears to be a justification for a having a mandatory retirement age. However, the firm did not succeed in proving this justification and it is difficult for us to imagine how you would be able to. This potential justification is surely too tainted with an unproved assumption that workplace performance declines after a specific age, e.g. after 65?
- The courts will take into account the relative bargaining power of the parties. In this case the rule was contained in the partnership deed which had been agreed by the partners, i.e. the owners of the business. This gave more weight to the justification argument.
- At the point of termination two interrelated questions must be asked: (1) was a rule requiring retirement at that age justified? (2) was the application of that rule justified in the particular circumstances? However, since a general rule such as retirement age must be applied to a whole group/workforce, etc. it will be rare that the second question requires much more than justification of the general rule.
- A compulsory retirement age cannot be defeated on the basis that a marginally higher age could have been used. That is to say, a retirement age of 65 cannot be successfully challenged on the basis that 66, 67, 68, etc. would have been less discriminatory. The court felt that this would make it impossible to justify any retirement age.
The court went on to approve two categories of legitimate aim. Firstly, "Dead Men's Shoes" which covered both providing solicitors at the firm with the opportunity of partnership after a reasonable period and assisting planning with realistic expectations as to when vacancies would arise. Secondly, "Collegiality" by limiting the need to expel partners by way of performance management and therefore contributing to a congenial and supportive culture. The firm only succeeded in proving the Dead Men's Shoes argument.
Looking ahead, we suspect that using either a Dead Men's Shoes or Collegiality argument to justify a retirement age across an entire business will prove difficult. Each case is likely to require a specific analysis of the department, sector, team, etc. that the individual worked in. Worse, retirement dismissals will almost certainly encourage disgruntled employees to challenge whether there is an objective justification. They will recognise that the mere fact of the claim may force an employer to settle to avoid a costly process justifying the retirement age and/or a ruling that the age is not justified. If the alternative route of fighting the claim was taken, a loss would mean a finding that the dismissal was discrimination on the grounds of age entitling the individual to uncapped compensation awards and injury to feelings claims. Therefore, our current thinking is that until there is a decent store of case law that you can refer to as guidance, the safest option would be to avoid retirement dismissals. This may therefore be a good moment to start polishing up those performance management procedures and skills …