Mark Shulman explains that justification of a mandatory retirement age may be difficult to achieve, despite a recent ruling by the Supreme Court that compulsory retirement does not necessarily amount to discrimination.
Is compulsory retirement of employees at age 65 discriminatory? "Not necessarily" said the Supreme Court in in a recent judgment. But in practice, justification of a mandatory retirement age might be difficult for employers to achieve.
Mr Seldon, a solicitor, had signed up to a partnership deed which required compulsory retirement following his 65th birthday. As he approached 65, Mr Seldon realised that for financial reasons he would need to go on working in some capacity for several years. He made a series of proposals to his partners with a view to continuing to work but these proposals were rejected. On reaching 65, Mr Seldon automatically ceased to be a partner in accordance with the partnership deed and brought a claim of direct age discrimination based on his compulsory retirement.
Clarkson Wright and Jakes, the partnership, argued that the mandatory retirement age was justified on the grounds of workforce planning which would provide greater certainty as to when vacancies would arise within the firm, the need to provide a career path for staff and to avoid an undignified expulsion of partners on performance management grounds.
Direct age discrimination can be justified if it is "a proportionate means of achieving a legitimate aim". European case law has recognised various legitimate aims in the context of age discrimination claims. Broadly, they fall within two categories: "inter-generational fairness" and "dignity".
Employers would need to ensure that as a starting point, any policy which is potentially discriminatory (such as a compulsory retirement age) falls within one of these categories of judicially accepted public interest aims. Alternatively, employers will need to persuade a court or tribunal that other aims should be considered legitimate in the public interest.
In Mr Seldon's case, the Supreme Court agreed that the aims of staff retention and workforce planning were directly related to a legitimate social policy aim - sharing out professional employment opportunities fairly between the generations. Likewise, the partnership's aim of limiting the need to expel partners by way of performance management was directly related to the "dignity" aims accepted in European case law.
Even where a policy aim can be established as legitimate, the means used to achieve it must also be "proportionate". When looking at proportionality, it has to be considered whether there are other, less discriminatory, measures which could be put in place. It is one thing for an employer to say that they have an aim to achieve a balanced and diverse workforce. It is another thing to say that a mandatory retirement age of 65 (or for that matter any other age) is both appropriate and necessary to achieving this end. It might be possible to achieve the desired outcome with a different age of compulsory retirement.
On that basis, Mr Seldon's case was sent back to an Employment Tribunal to consider whether the choice of 65 as a mandatory retirement age was in fact an appropriate means of achieving a legitimate aim by the partnership.
In the words of Lady Hale in the Supreme Court: "All businesses will now have to give careful consideration to what, if any, mandatory retirement rules can be justified."
This article is based on Mark Shulman's case round up first published on Employment Cases Update (www.employmentcasesupdate.co.uk).
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.