The Supreme Court has today made a landmark decision to dismiss the appeal in the Seldon retirement case.
This case concerned the scope for justifying direct discrimination on the ground of age and in particular a mandatory retirement age contained within a partnership agreement.
In the Seldon case, Leslie Seldon, a partner in law firm, Clarkson, Wright and Jakes, was retired at the age of 65 under the partnership deed.
Unlike employees, partners were not covered by the DRA and the retirement of a partner at any age requires objective justification. The courts have so far held that the arrangement applied to Seldon was justified because it assisted manpower planning by facilitating progression for associates and giving reasonable expectations on when partnership vacancies would arise.
He claimed against the firm, alleging unlawful age discrimination, but an Employment Tribunal, an Employment Appeals Tribunal and the Court of Appeal ruled against him.
The Supreme Court today unanimously dismissed the appeal and remitted the case to the Employment Tribunal on an outstanding issue to consider whether the choice of a mandatory age of 65 was a proportionate means of achieving the legitimate aims of the partnership.
Commented Adrian Hoggarth, Head of Employment at law firm Prolegal:
“The case provides some welcome clarity for employers, who have understandably been nervous about compulsory retirement since the repeal of the default retirement age.
“However, given that the issue of proportionality has been remitted to the Tribunal we are left with some uncertainty as to when particular retirement ages are justified. Although this case involved a partner in a law firm, the same principles will apply to compulsory retirement ages for employees.”
He added:
“It seems clear that compulsory retirement will be justifiable in some circumstances, such as a need for realistic expectations as to when vacancies might arise in order to allow progression for younger employees.
“Employers and partnerships will need to draft retirement policies carefully to explain the need for the retirement age as those policies will need to be proportionate. It is vital that employers consider the effect on older workers of any compulsory retirement age they set and look at the alternative options.”
Neil Carberry, CBI Director for Employment and Skills policy, said:
“This ruling confirms that, at least in principle, companies are able to set their own retirement age. However, this does nothing to fill the vacuum left by the Government’s scrapping of the Default Retirement Age.
“If employers want to set a retirement age that is suitable for their workforce, and know for sure whether it is legitimate, they will still have to go through a costly and lengthy legal process.
“The Government cannot continue to pass the buck. Employers need to know how to handle the sensitive issue of retirement, with adequate protection to discuss plans with their staff, and better guidance on when a retirement age is justifiable.”
