Seldon v Clarkson, Wright & Jakes, EAT
Mr Seldon was a partner in a firm of solicitors, Clarkson, Wright & Jakes. Following a long period of service as a partner, he was compulsorily retired from the partnership on 31 December 2006. The firm’s partnership deed allowed it to compulsorily retire partners at the end of the year in which they reached the age of 65.
Seldon decided that he wished to continue working, and entered into discussions with the firm regarding undertaking work as a consultant after his retirement. The firm decided there was no business case for offering a consultancy role, and his compulsory retirement went ahead. He then brought a claim on the basis that his compulsory retirement constituted unlawful direct age discrimination under the Employment Equality (Age) Regulations 2006.
There has been a lot of controversy about the exemption in regulation 30 of the regulations, which allows for compulsory retirement at the age of 65 or above. This is currently the subject of a challenge in the European Court of Justice in the Heyday case.
Curiously, this exception does not apply to partners. This means that forcing a partner to retire when they reach a certain age will be unlawful unless it can be objectively justified. The ability to objectively justify direct age discrimination is one of the unusual features of age discrimination when compared with discrimination on other grounds. To decide whether something is objectively justified, you need to determine whether it is a proportionate means of achieving a legitimate aim.
The employment tribunal found that three aims which had been identified by the firm satisfied the objective justification test:
retaining associates by ensuring the opportunity for partnership after a reasonable period
ensuring effective workforce/succession planning by having a realistic long-term expectation as to when vacancies would arise
fostering a congenial and supportive culture by limiting the need to expel partners due to poor performance.
The Employment Appeal Tribunal (EAT) overturned the tribunal’s decision in respect of the latter, as the firm had not shown adequate justification for fixing the retirement age at 65 to achieve that aim. It found that, while this could be a legitimate aim, the firm had not produced evidence to support its assertion that a partner’s performance would deteriorate at that age, and that this was based on a stereotypical assumption.
The EAT upheld the tribunal’s decision that the first two objectives were legitimate aims, but referred the matter back to the tribunal to decide whether the firm’s objective justification defence could succeed when limited to these aims.
The EAT made the observation that the congeniality aim could carry some weight in the tribunal’s decision, albeit the firm had failed to show that this could in itself justify retirement at 65.
The EAT’s decision (and indeed the tribunal’s consequential ruling) will be of particular interest to professional services firms and other partnerships. It highlights the importance of carefully considering, and taking advice on, retiring partners at a particular age. While the case gives helpful guidance on what may constitute legitimate aims for this purpose, such aims must be relevant to the particular partnership and will not be universally applicable. It is crucial to show that you have evidence that compulsory retirement at that age represents a proportionate means of achieving those aims. It is necessary to be careful, not least because the cost of unsuccessfully defending a claim can be very high where a partner’s earnings are significant.
by Matthew Whelan, solicitor, employment team, Speechly Bircham