Yes, says the UK Supreme Court ("UKSC").
In a ruling issued on 25 April 2012, in the case of Seldon -v- Clarkson Wright & Jakes [2012] UKSC16 ("Mr. Seldon") the UKSC ruled that a compulsory retirement age may be permissible even though it constitutes direct age discrimination.
Facts
Mr. Seldon was a partner of Clarkson Wight & Jakes ("Clarkson") which had a partnership retirement age of 65. He asked to stay on past 65 but Clarkson refused. As a partner, Mr. Seldon was not subject to the then statutory default retirement age for employees of 65 and he claimed that the decision by Clarkson to make him retire was direct discrimination for which Clarkson had no "objective justification".
In hearings in lower courts, Clarkson had successfully argued that it had objectively justifiable reasons for a compulsory partnership retirement age being succession planning; making room for and encouraging younger lawyers to aspire to partnership; and the desire to have a congenial and supportive culture by limiting the need to expel partners using performance management.
The case was referred to the UKSC for a ruling on what reasons were capable of justifying direct age discrimination and therefore permitting an organisation to have a compulsory retirement age or ages' as the issue was of general importance following the abolition of the "default retirement age" of 65 for employees.
Decision
The UKSC noted that the relevant European Union directive (prohibiting discrimination generally) contemplated that "differences in connection with age may be justified under certain circumstances...it is therefore essential to distinguish between differences in treatment which are justified by...employment policy, labour market and vocational training objectives and discrimination which must be prohibited". The UKSC also reviewed rulings issued by the European Court of Justice ("ECJ") on age discrimination claims and noted that the ECJ has held that aims such as "sharing employment between the generations" and "not requiring employers to dismiss [older workers] on grounds of incapacity" which may be "humiliating" were "in principle capable of objectively and reasonably justifying a treatment on grounds of age".
The UKSC confirmed that staff retention, workforce planning, and limiting the need to expel, by way of performance management are all legitimate aims capable of justifying direct age discrimination and hence a compulsory retirement age as they fall within the categories of legitimate social policy objectives identified by the ECJ being "inter generational fairness" and "dignity" permitting direct age discrimination.
Mr. Seldon's case has returned to a lower tier tribunal for a decision on whether, in his case, the specific retirement age (65) could be justified.
What does this mean for employers?
The ruling does not mean that every employer can immediately impose or reimpose a compulsory retirement age and indeed many employers will not wish to do so.
Where an employer has retained compulsory retirement age, or wishes to introduce one, it will have to show that retention of a retirement age and the selection of a particular retirement age continues to be appropriate and necessary in the particular circumstances of the business having regard to the social policy objectives noted by the UKSC.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
