65 and too young to retire? Supreme Court clarifies the law
Apr 27, 2012
Retirement used to be a relatively simple concept: An employer could retire all staff who had reached the age of 65 and employees could do very little to stop them. Last year the government removed the default retirement age of 65. However employers were left with room to justify such age discrimination if they could show that it was a “proportionate means of a legitimate aim.” Whilst the courts have provided some guidance on what this means in practice, the changes have left employers struggling to answer this question: Is it still possible to retire employees as before? This month the UK Supreme Court has given some guidance on whether or not a fixed retirement age might be justified. The case is called Leslie Seldon v Clarkson Wright and Jakes. Mr Seldon was a partner in the Kent law firm of Clarkson Wright and Jakes. The partnership agreement specified that all partners must retire at the age of 65. Mr Seldon wanted to keep working beyond 65 but his partners insisted that he left the business and so he issued a claim of age discrimination. This issue of retirement is no stranger to politicians and employment lawyers alike. On the one hand, many of us want to work longer because we are living longer and may have inadequate pension provisions. On the other hand, this leaves employers with potential concerns over the capabilities of an ageing workforce and problems when it comes to planning promotion and the succession of senior jobs. In the case of Mr Seldon, the Supreme Court has indicated that whilst the mandatory retirement of 65 amounted to age discrimination, it was capable of justification since it served legitimate purposes. It was said that there must be a “public interest” which includes the need to: – Ensure younger workers have a reasonable expectation of promotion to partner after a certain period. – Facilitate planning by having a realistic long-term expectation as to when vacancies might arise. – Limit situations where partners are forced out of work for poor performance. The law in this area is far from clear and our team of employment law solicitors will be watching developments closely. In simple terms, the question of “When can I retire my employees?” has not been answered. This is because Mr Seldon’s case was based upon a very specific set of circumstances. The court’s judgment stresses that employers will have to give particular consideration as to what, if any, default retirement ages can be justified in their particular business. That said, it appears to be a step in the right direction for employers as the new law on retirement ages begins to take shape.