Supreme Court Hands Down Seldon Judgment on Justifying Retirement Ages

The Supreme Court has ruled that a law firm’s aims of retaining associates, facilitating workforce planning and avoiding the need to performance manage partners were capable of justifying compulsory retirement. However, it has remitted the case to the employment tribunal to consider whether compulsory retirement at age 65 (as opposed to any other age) was a proportionate means of achieving these aims.

In Seldon v Clarkson Wright and Jakes, S, a partner in a law firm, was forced to retire at the end of the year in which he reached the age of 65 in accordance with terms of the partnership deed.  His request to work longer was refused and he claimed direct age discrimination.  The employment tribunal held that compulsory retirement was a proportionate means of achieving the legitimate aims of:

• retaining associates (by giving them the opportunity of partnership after a reasonable period);
• partnership and workforce planning (by giving realistic expectations as to when vacancies would arise); and
• contributing to a congenial and supportive workplace culture (by limiting the need to expel partners through performance management).   

His compulsory retirement was therefore lawful. S appealed unsuccessfully to the EAT and Court of Appeal.

The Supreme Court has ruled that each of the firm's aims was based on social policy aims, as opposed to individual business needs and were legitimate in the particular circumstances of this business.  The first two were directly related to the legitimate social policy aim of sharing out work opportunities fairly between the generations.  The third was directly related to preserving dignity, which had been accepted by the ECJ as a legitimate social policy aim.    However, the case was remitted to the tribunal to decide whether the choice of age 65 was a proportionate means of achieving those aims which will require it to consider whether it was both appropriate and necessary. 

The Supreme Court ruled that when justifying direct age discrimination it is necessary for an employer’s aims to be linked to a social policy aim.  In the context of justifying a compulsory retirement age, this may not be that difficult as workforce planning will usually feature in the employer’s reasons for retaining a compulsory retirement age.  What may prove more difficult is the requirement that the aim relied on must be legitimate in the particular circumstances of the case. The Supreme Court gave the following examples:

• the aim of improving the recruitment of young people, in order to achieve a balanced workforce, is, in principle, a legitimate aim.  But if in fact the employer has no problem recruiting the young but does have a problem with retaining older and more experienced workers, then it may not be legitimate for the particular business concerned; and
• avoiding the need for performance management may be a legitimate aim, but if in fact the employer already has sophisticated performance management measures in place, it may not be legitimate to avoid using them for one section of the workforce. 

These examples demonstrate that employers cannot simply point to the aims found as legitimate in this case and assume they will be found to be legitimate in the context of their business. 

In addition, employers may find it difficult to show that the particular retirement age they have chosen is an appropriate and necessary means of achieving their legitimate aim.  This will involve a consideration of whether the aim could be achieved by another, less discriminatory, means.  The employment tribunal’s decision on this issue will be awaited with interest – although it may not be that helpful as it has been directed to consider this question as at the date S retired.  At that time a default retirement age of 65 for employees was in force and the tribunal may well consider this relevant when determining this question.