Compulsory Retirement Age of 65 Justified
A compulsory retirement age of 65 was a proportionate means of achieving the legitimate aims of retaining associates and workforce planning. It was therefore justified.
An employment tribunal has given its ruling in the long-running case of Seldon v Clarkson Wright and Jake. The case considered whether Mr Seldon, a partner in a law firm, had suffered unlawful age discrimination by being required to retire at the age 65 in accordance with terms of the partnership deed, or whether the compulsory retirement age was justified.
The case proceeded all the way to the Supreme Court and last year the case was remitted back to the employment tribunal to consider whether the choice of age 65 was a proportionate means of achieving the employer’s legitimate aims of retaining associates and workforce planning. The employment tribunal has ruled that it was and that the retirement age was therefore justified.
The fact that a higher or lower retirement age could have been agreed did not mean that the age selected was not justified. There had to be a balance between the needs of the firm, the partners and the associates. The retirement age selected must not be so high as to discourage associates who may otherwise leave and seek partnership opportunities elsewhere. Nor must it be so low that associates become concerned that the duration of partnerships is too short, that they will have insufficient time as partners to make proper provision for retirement or that partners are being required to retire before the end of their careers, risking them continuing their careers elsewhere and the firm losing its goodwill and connection. There was a narrow range of ages which could be justified.
In concluding that the age of 65 was justified, the tribunal also took into account the fact that the partners (including Mr Seldon) had agreed to that age in the partnership deed (and that the parties were of equal bargaining power when coming to that agreement), the default retirement age at that time was 65 and the state pension age for men at that time was 65.
The tribunal decision contains some useful guidance on the correct approach to choosing a compulsory retirement age for those employers who still wish to have one. However, it should not be seen as enabling all employers to justify a compulsory retirement age, and even less so a compulsory retirement age of 65. The tribunal stated clearly that the position might well have been different if it were judging the question of justification at today’s date – after the abolition of the default retirement age.
Employers who have retained a compulsory retirement age will have to justify their decision by reference to legitimate social policy aims applicable to their business. The most likely in the context of a compulsory retirement age is workforce planning and career progression - both of which relate to the social policy aim of sharing work fairly between the generations. More difficult will be the need to show that compulsory retirement is a proportionate means of achieving those aims and that the particular retirement age selected is appropriate and necessary. Whilst Mr Seldon’s firm was able to do this against the backdrop of the default retirement age, employers no longer have that option and will have to carry out a careful balancing exercise between the needs of their business and those of all their staff.
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