The recent case of Seldon v Clarkson Wright and Jakes presented an opportunity for the Supreme Court to consider the circumstances in which enforcing a compulsory retirement age could be justified.
The Equality Act 2010, prohibits employers from (amongst other things) treating employees less favourably on the grounds of their age (direct age discrimination). Compulsory retirement amounts to direct age discrimination unless it is objectively justified. Direct age discrimination can be justified by reference to a “legitimate aim” which can include a legitimate employment policy, labour market policy and/or vocational training objectives. However, the treatment in question must be a “proportionate means of achieving” that legitimate aim.
Mr Seldon, a partner in a law firm claimed direct age discrimination when he was required to retire at 65. The default retirement age provisions of the old age discrimination regulations which were in force at the time permitted mandatory retirement of employees, but this did not apply to partners. Accordingly the firm were required to objectively justify its treatment of Mr Seldon.
The Employment Tribunal identified that Mr Seldon’s employers had three legitimate aims for the mandatory retirement age:
- retaining talented younger staff by providing opportunities for promotion
- workforce planning to allow associates to move up the firm
- maintaining dignity by avoiding the need to performance manage older partners
The Supreme Court concluded that direct discrimination can only be justified by reference to an aim which is of “a public interest nature” and is consistent with the social policy aims of the employer, rather than by reference to reasons particular to the employer’s situation. It agreed with the Employment Tribunal that the aims identified by the law firm were legitimate.
Whether the age of 65 was a proportionate means of achieving that aim is a question that has been remitted to a fresh tribunal so it will be interesting to see the final outcome of this case.
So what are the implications for employers?
Much of the initial press commentary on this case would suggest that the Supreme Court has made it easier for employers to force employees to retire without falling foul of age discrimination law. It is true that the Supreme Court confirmed that the reasons for compulsory retirement relied on by the firm in this case were “legitimate aims” within the domestic and European legislation, such as to be capable of justifying what would otherwise be unlawful direct age discrimination. However, much of the Supreme Court’s ruling should be seen as a serious note of caution to employers seeking to justify compulsory retirement. Indeed, Lady Hale emphasised that “all businesses will now have to give careful consideration to what, if any, mandatory retirement rules can be justified”.
Employers should be cautious about enforcing a compulsory retirement age as it will need to justify this by reference to a legitimate aim. The finding in Seldon that direct discrimination can only be justified by reference to a public or social policy aim could make it more difficult for employers to justify direct discrimination. This could cause problems particularly for employers whose priorities are specific to business needs rather than wider social policy aims. However, the case did show, in the approval of the legitimate aims outlined at Tribunal, that the Court are willing to accept that public policy aims can still be related to the particular circumstances of the business concerned.
It may be found in the next installment of the Seldon litigation that the aims of the measures used, though legitimate, have a disproportionately discriminatory affect on the effected work force and therefore cannot be justified. Indeed in a country where we have to work later in order to qualify for a full pension, retiring at 65 may no longer be a realistic prospect.
Employers hoping for a concrete resolution to this issue may have to wait for some time. In the meantime, employers will have to rely on their appraisal and performance management systems and workforce planning across their whole workforce to try and get some certainty on the aspirations of all employees with regard to their retirement.