Employers that want to enforce a default retirement age (DRA) can rely on objectives that are purely beneficial to their own business, rather than to “society at large”, the Court of Appeal has ruled.
It follows the landmark case of Leslie Seldon, a former senior partner at law firm Clarkson, Wright and Jakes, who was forced to retire at the age of 65 according to the terms of the firm’s partnership deed. Under age discrimination laws introduced in 2006, partners are excluded from the DRA, but can be justifiably made to retire at the age of 65 to achieve business aims – for example, to aid workforce planning.
The judgment upholds the right of partnerships to retire their partners at a chosen retirement age. More importantly, it confirms that employers, whether they are partnerships or companies, can justify age discrimination without being able to show that their actions pursue any form of public policy objective.
Caroline Carter, head of the employment practice at law firm Ashurst, said the decision was good news for all employers.
“The Government is currently reviewing the default retirement age (which applies to employers other than partnerships), with a view to either increasing it or removing it altogether. If it is removed, the Seldon case gives those employers a means to continue using a DRA, if they choose to do so,” she said.
“This could be a valuable way to ensure that businesses can offer much-needed opportunities to graduates and other new recruits, and plan for succession of senior staff more effectively.”
Implications for employers
Read XpertHR’s analysis of the Seldon v Clarkson Wright and Jakes case and find out what the implications are for employers.
Stephen Simpson, employment law editor at XpertHR, added: “The point is also made that, when considering justification, it can be a consideration that a rule such as a compulsory retirement age has been agreed by parties of equal bargaining power.
“While applying here to partnerships, it might also cover very senior members of staff who voluntarily sign up to discriminatory rules.”
The objectives relied on by Clarkson, Wright and Jakes in enforcing its mandatory retirement age were:
- encouraging retention of more junior employees/partners by ensuring they are given the opportunity of promotion after a reasonable period;
- facilitating the planning of the business by having realistic expectations of when vacancies will arise; and
- encouraging a supportive and congenial atmosphere by avoiding the need to expel employees/partners by way of performance management.