An Employment Tribunal has held that a compulsory retirement age of 65 in a partnership deed was justified as a proportionate means of achieving legitimate aims in the particular circumstances.
The Employment Tribunal's decision, made on 28 May 2013, ends a six year legal battle between lawyer, Leslie Seldon, and his former firm, Clarkson Wright & Jakes (CWJ). Seldon, who was forced to retire at age 65, argued that CWJ's compulsory retirement age constituted direct age discrimination.
At the time of Seldon's retirement, the Default Retirement Age (DRA) of 65 applied to employees but not to partners. Instead CWJ had to satisfy the Tribunal that retiring partners at a particular age was justified as 'a proportionate means of achieving a legitimate aim' under Regulation 3 of the Employment Equality (Age) Regulations 2006 (since replaced by s13 Equality Act 2010). This regulation now applies to employees as well since the DRA was abolished in 2011.
The case turned on whether age discrimination inherent in mandatory retirement policies can be justified under the law as a proportionate means of achieving a legitimate business aim. CWJ argued that there were three main aims that justified the compulsory retirement age of 65 for partners. These aims were:
Ensuring that associates were given the opportunity of partnership after a reasonable period as associate, thereby ensuring that associates did not leave the firm (the Retention Aim);
Facilitating the planning of the partnership and workforce across individual departments by having a realistic long term expectation as to when vacancies will arise (the Planning Aim); and
Limiting the need to expel partners by way of performance management thus contributing to the congenial and supportive culture in the firm (the Collegiality Aim).
Seldon's claim had already been rejected by the Employment Appeal Tribunal, who accepted the Retention Aim and the Planning Aim but dismissed the Collegiality Aim on the basis that it was not supported by any evidence and was based on a stereotypical view that a partner's productivity decreased at age 65 onwards. The Court of Appeal upheld all three aims and the case was appealed to the Supreme Court in 2012 before being referred back to the Employment Tribunal.
The Employment Tribunal had to decide whether a cut-off age of 65 was a proportionate means of achieving the Retention Aim and the Planning Aim. The Employment Tribunal noted that all partners had consented to a mandatory retirement age of 65 in the partnership deed, in line with the DRA at the time. The fact that a higher or lower retirement age could have been agreed did not mean that the age selected was not appropriate. The retirement age had to be not so high as to discourage associates who may leave and join another firm or not too low that partners had to retire before the end of their careers.
The Employment Tribunal decided that a compulsory retirement age of 65 in the partnership deed did justify the legitimate Planning and Retention Aims and Seldon's age discrimination claim was dismissed. It was concluded that there had to be a balance between the needs of the firm, partners and associates and in the circumstances age 65 was a fair and proportionate cut-off point.
This case may be seen as good news for employers who have imposed or wish to impose a compulsory retirement age, following the abolition of the DRA. However, employers will still need to justify having a compulsory retirement age as being a proportionate means of achieving a legitimate aim. Employers will have to give consideration as to whether they can justify a specific compulsory retirement age.
It is worth noting that at the time Seldon's claim arose in 2006, the DRA of 65 was still in force. For this reason, the decision may not be as helpful as it would have been if the DRA was still applicable and the decision may have been different if the relevant date had been after the abolition of the DRA.
If you would like to discuss any aspect of this update further, please contact James Dean or your usual TLT pensions contact.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2013. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.
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