As many of you may have seen reported in the press, the Supreme Court has turned down Mr Seldon's appeal against the Court of Appeal's decision that his law firm, Clarkson Wright & Jakes, was entitled to force him out because he had reached the firm's retirement age of 65. However, the Supreme Court has sent the case back to the tribunal to determine whether the age of 65 is the appropriate age for retirement. In other words, can the law firm provide satisfactory evidence that 65 is the right retirement age required to achieve the "legitimate aims" that it put forward to justify the retirement age of 65? So what does this mean for you?

Not an Employer's Charter

The Supreme Court's decision should not be taken as carte blanche for employers to have a compulsory retirement age of 65 (or any other age). Indeed, if you have a compulsory retirement age, you should give very careful consideration as to:

(i) the business reasons underpinning the age decided upon;

(ii) the evidence that objectively supports those reasons; and (in the light of the Seldon case)

(iii) how the business can show that 65 (or the compulsory retirement age decided on) is the right age, i.e. that the choice of the mandatory retirement age is a proportionate means of achieving those legitimate aims, rather than, say, 70 or some other age.

It may well be the case that, being able to evidence objective justification, a business is put to very considerable expense in relation to collating the statistical data required to support its case. This alone may be a disincentive to having a compulsory retirement age.

Devil in the Detail

Certainly, the devil is in the detail of the Supreme Court's decision. The Supreme Court, after an analysis of the relevant European cases, concluded that our government has legitimately given UK employers and partnerships "the flexibility to choose which objectives to pursue, provided always that (i) these objectives can count as legitimate objectives of a public interest nature (emphasis added) ....and (ii) are consistent with the social policy aims of the state and (iii) the means used are proportionate, that is both appropriate to the aim and (reasonably) necessary to achieve it".

'After the event' rationalisation of the aim is lawful

An important point came out in the Seldon litigation, namely that at the time Mr Seldon was compulsory retired, the firm had not identified the aims that it subsequently relied upon in defending the claim. The Supreme Court concluded that it is not necessary for the stated aims relied upon to defend a claim of direct or indirect age discrimination to have been in the minds of those adopting the measure at the time of its adoption.

Once the aim is identified it must be shown to be "legitimate"

The Supreme Court made it clear that once the aim is identified, there still has to be evidence to show that it is legitimate. The Court gave examples: (i) improving the recruitment of young people and so having a balanced and diverse workforce, is in principle a legitimate aim, but if, in reality (demonstrated by recruitment statistics) there is no problem in recruiting young people, rather in retaining older workers, then this cannot be a legitimate aim for the particular business and (ii) avoiding the need for performance management may be legitimate, but if sophisticated performance management measures are embedded in the business, it may not be legitimate for the business to avoid them in relation to only one class of the workforce (those who have attained the compulsory retirement age).

Sting in the Tail

Employers choosing to have a compulsory retirement age could be in for a shock once the tribunal hear the case as to whether or not 65 was a proportionate means of achieving each of the stated objectives of Mr Seldon's former firm. The statistical analysis needed to show that 65 was more proportionate than say 66, 70 or 75 may be very onerous – the need to show, for example, that at age 65 a partner's performance decreased such that he/she was likely to fall below the standards required of partners in the firm, may be hard to prove at a general level (evidence that individual's mental faculties decrease once over 65 making the pursuit of law harder), let alone amongst those who have served as partners in the firm.

Conclusion

In relation to retirement policies, employers need to speak to their lawyers, whatever their age!

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.