Is a retirement age of 65 justified?

In this month’s e-news we concentrate on two important Supreme Court decisions dealing with age discrimination.

Is a retirement age of 65 justified?

Mr Seldon was a Partner in the law firm, Clarkson Wright & Jakes. He and the other partners in the firm agreed and adopted a Partnership Deed which provided that subject to partners’ agreement to the contrary, partners who attain the age of 65 had to retire from the firm by the end of the following December.

Mr Seldon reached the age of 65 on 15th January 2006 and requested to continue working. This was not agreed by the Partnership.

Mr Seldon submitted a claim in the Employment Tribunal alleging that he was discriminated against on the grounds of age. The Employment Tribunal formed the view that the retirement age set out in the Partnership Deed had three legitimate aims:-

1 Giving associates an opportunity of partnership within a reasonable time, and thereby an incentive to remain with the Partnership.

2 Facilitating work force planning by knowing when vacancies were to be expected, and

3 Limiting the need to expel under-performing partners, thus contributing to a congenial and supportive culture within the Partnership.

Mr Seldon appealed to the Employment Appeal Tribunal. The Employment Appeal Tribunal whilst agreeing with the Employment Tribunal that the Partnership had valid legitimate aims, it also held that the Employment Tribunal had failed to consider whether the aims could have been met by a retirement age other than 65 and remitted the case on that point alone.

Despite this, Mr Seldon appealed to the Court of Appeal. The Court of Appeal dismissed Mr Seldon’s appeal and agreed with the Employment Tribunal and the Employment Appeal Tribunal.

Mr Seldon then appealed to the Supreme Court alleging that the aims pursued by the Partnership were not legitimate and secondly, that the treatment had to be justified not only in respect of the Partnership generally but in its particular application to Mr Seldon.

The Supreme Court dismissed the appeal and remitted the case back to the Employment Tribunal on the outstanding issue, namely whether the mandatory retirement age of 65 was a proportionate means of achieving the legitimate aim.

It is clear that the principles set out in this case will also apply to employees rather than just Partners and therefore this case will be of benefit to those organisations, particularly in the professional field, who will be able to relate to the aims put forward by the Partnership. However this is not the end of the matter. Once an employer has identified a legitimate aim, it then has to show that the retirement age proposed is a proportionate means of achieving that aim.

The Employment Tribunal will expect to see evidence that not having a retirement age is having an impact on recruiting and retaining employees. The organisation will also have to show that it considered other ways of meeting that aim for example, having a retirement age of 68 or indeed 70.

Accordingly, this issue is far from certain and is likely to require further litigation before further clarity is received.

Is it discriminatory to have a promotion policy that deters the older work force from complying with it?

Mr Homer began working for the Police National Legal Database as a Legal Adviser in 1995 at the age of 51. When he was appointed, the role did not require a law degree or equivalent provided the post holder had exceptional experience or skills in criminal law, combined with a lesser qualification in law.

In 2005 the organisation introduced a new grading structure to improve career progression and offer more competitive salaries. The new structure provided three promotion thresholds above the starting grade, the final required a law degree. In 2006, Mr Homer was graded under the new system as reaching the first and second thresholds but not the third. In order to reach the third threshold under the new structure, Mr Homer would have had to require to study for a law degree part time alongside his work. This would take four years to complete.

At this time Mr Homer was 62 years old and was due to retire at 65. Accordingly, he would have been unable to reach or benefit from being at the third threshold before leaving the employment.

Mr Homer issued proceedings alleging that he had been indirectly discriminated against on the grounds of his age.

Indirect discrimination occurs when a person A applies to another person B a provision, criteria or practice which he applies to all persons but which puts the persons of the same age group as B at a particular disadvantage when compared with other persons and which puts B at that disadvantage, and they cannot show the provision, criteria or practice to be a proportionate means of achieving the legitimate aim. In this case the provision, criterion or practice was the requirement to have a law degree to reach the third and final promotional level.

In January 2008, the Employment Tribunal found that the appropriate age group was employees between 60 and 65 as these persons would have been unable to obtain any real benefit from obtaining a law degree before retiring and held that it did amount to indirect age discrimination.

The Organisation appealed.

The Employment Appeal Tribunal and the Court of Appeal rejected Mr Homer’s claim. Their view was that what put Mr Homer at a disadvantage was not his age but his impending retirement.

Mr Homer Appealed.

The Supreme Court disagreed with this analysis and upheld Mr Homer’s appeal. Although Mr Homer was indirectly discriminated on the grounds of his age, it is still open for the employer to justify the discriminatory conduct. This specific issue has been remitted back to the Employment Tribunal for consideration in light of the Supreme Court’s findings.

These are two key important decisions for employers in considering age discrimination claims and in particular whether discriminatory conduct can be justified. This is particularly so, as it is inevitable that discrimination claims will increase in light of the fact that the qualifying period for unfair dismissal has been increased from one to two years from April this year.

Sejal Raja
sejal.raja@rlb-law.com
© RadcliffesLeBrasseur
March 2012

If you have any questions please do not hesitate to contact Sejal Raja at sejal.raja@rlb-law.com or 0207 227 7410.


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.