The decision in this case has been awaited with anticipation for some time now in the hope that it would provide some much needed guidance in a complicated area. I had a somewhat hectic week last week so this is not quite hot of the press but hopefully it is still of interest.
The background to this one is that Mr Seldon had been an equity partner in a law firm since 1972. The partnership agreement required partners to retire at 65 unless the other partners agreed otherwise.
When Mr Seldon reached 65 in 2006, he asked to continue to work on. His proposal was rejected on the basis of there being no sufficient business need.
It is worth noting that Mr Seldon was a self-employed partner and was not an employee. Had he been an employee the employer could simply have followed the default retirement procedure which was in place at the time (it was introduced in 2006 but subsequently abolished in 2011).
It is also worth noting that, whilst both of these cases refer to the previous Regulations, the same principles continue to apply under the Equality Act 2010.
As a result of the decision to refuse to allow him to work beyond 65 Mr Seldon raised a claim for direct discrimination on the grounds of age.
Unlike other forms of discrimination, direct age discrimination can be objectively justified and the Partnership argued that the age discrimination was justified. They argued that it was justified, amongst other things, as the policy:-
- ensured that associates were given the opportunity of partnership after a reasonable period of time as an associate, thereby ensuring that associates did not leave the firm;
- facilitated the planning of the partnership and workforce across individual departments by ensuring there was a realistic long term expectation as to when vacancies will arise;
- limited the need to expel partners by way of performance management, thus contributing to a congenial and supportive culture in the Firm.
The Tribunal decided that retirement was justified and that it was a proportionate means of achieving these aims.
The case was then appealed on various occasions before ending up in the Supreme Court.
Since the case began, as indicated above, the default retirement age which was previously available to employers has been abolished. As such, although Mr Seldon was not an employee, the decision in this case has been awaited with much interest in the hope it would provide guidance on the situations where an employer can justify retiring an employee.
The Supreme Court’s judgement in this regard, provides some useful guidance as to the sort of circumstances that age discrimination can, potentially, be justified.
The Court considered that the test for justifying direct discrimination is more limited than the usual discrimination justification test. They decided that the legitimate aims identified must be “social policy objectives”, such as:-
- promoting inter-generational fairness or
- preserving the dignity of older workers.
In their opinion, the 3 aims referred to above which were put forward as justification by the partnership before the Employment Tribunal fell within this “social policy objective” category.
The case has now been sent back to the Employment Tribunal so that they can consider whether the mandatory age of 65 was a proportionate means of achieving the aims identified. This will involve the Tribunal deciding whether 65 was the appropriate age to have compulsory retirement or whether it should have been some different age.
I noticed a number of headlines and press reports which suggested that this decision means that it is now easier for employers to force employees to retire. Whilst the case provides some useful clarification of certain issues there are, unfortunately, still a number of hurdles in the way of an employer who wants to set a compulsory retirement age.
In particular, the aims identified must be legitimate having regard to the particular circumstances of each case. For example, with regard to the first aim identified an employer would have to show, having regard to their particular circumstances, that they did indeed have problems with, for example, retaining younger employees due to a “blockage” of jobs at a more senior level caused by employees carrying on working rather than retiring. Similarly, with regard to the aim relating to dignity, it may be that a Tribunal will take the view that an employer should be expected to utilise their performance management processes rather than have a blanket compulsory retirement age.
Watch this space for further developments as I am sure we have not heard the last on this matter. I suspect we won't be seeing a rush by employers to reinstate their compulsory retirement procedures just yet.