The Supreme Court has recently handed down its judgment in
Seldon v Clarkson Wright and Jakes. Whilst the matter has been
remitted to the employment tribunal for further consideration, the
decision represents a significant narrowing of the circumstances in
which an employer can justify its own compulsory retirement age and
will therefore be of particular interest to in-house legal and HR
professionals.
Facts
Leslie Seldon, an equity partner at Clarkson Wright and Jakes,
was compulsorily retired on 31 December 2006, the year in which he
reached age 65, in accordance with the partnership deed. Mr Seldon
began proceedings against the firm, alleging that his expulsion was
an act of direct age discrimination as it was directly due to his
age. The firm claimed that his treatment was justified.
Unlike other forms of direct discrimination, direct age
discrimination can be objectively justified by a legitimate aim,
including legitimate employment policy, labour market and
vocational training objectives if the means of achieving that
legitimate aim are appropriate and necessary.
The Supreme Court held that whilst the compulsory retirement age
in the partnership deed was a directly discriminatory measure, it
was capable of justification because it was based on various
legitimate aims - the retention of associates, facilitating the
succession planning of the partnership and workforce by having a
realistic long term expectation as to when vacancies would arise,
and limiting the need to expel partners by way of performance
management to contribute to a congenial and supportive culture in
the firm.
The case was remitted back to the employment tribunal who will
now need to decide whether the specific age of 65 was an
appropriate and necessary means of achieving the firm's aims in
the particular circumstances of the firm.
Comments
Whilst the Supreme Court was fairly pragmatic in its
reasoning:
- business is competitive and employers 'are not a social
service
- employers who still have a policy of compulsory retirement
would be well advised to review this in light of the decision in
Seldon. In so doing, employers should have regard to the
three-stage test for justifying direct age discrimination which was
clarified by the Court.
Do the measures seek to achieve a legitimate aim?
'Inter-generational fairness' (eg the interchange of ideas
between younger and older workers) and 'dignity' (e.g.
avoiding the need for costly and divisive disputes about capacity
or underperformance) are legitimate aims; reasons particular to the
employer such as cost reduction and improving competitiveness are
not.
Is the aim legitimate in the particular circumstances of their
business? For example, whilst a policy of improving the recruitment
of young people in
order to achieve a balanced and diverse workforce is in principle a
legitimate aim, if the business in question is easily able to
recruit young people but has a problem with retaining older
workers, it is unlikely to be a legitimate aim for that business.
The Court made clear that it is the particular circumstances of the
business rather than the individual that should be considered.
Are the means of achieving the aim proportionate i.e. both
appropriate to the aim and necessary to achieve it, or are other,
less discriminatory, measures possible? For example is a mandatory
retirement age of 65 a proportionate means of achieving a balanced
and diverse workforce?
Employers should also be aware of the possible impact of the
decision on any other policies or practices which distinguish
between employees on age-related grounds (e.g. employee share
schemes that favour those retiring on or after a specified age in
circumstances where none of the statutory exceptions are
applicable).
It is also important to note that although the Tribunal, the
EAT, the Court of Appeal and the Supreme Court accepted that a
legitimate aim within Clarkson, Wright and Jakes included reducing
the need to expel partners for performance management reasons, the
EAT held that fixing a particular age of 65 on the basis that
performance would drop off that at age was not justified because
there was no evidential basis for that assumption. It will be
interesting to see how the Tribunal addresses this question.
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.
Specific Questions relating to this article should be addressed directly to the author.
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