The Employment Equality (Age) Regulations 2006 introduced a new, default retirement age of 65 and allow that provided certain procedures are followed, compulsory retirement at that age will not be discriminatory. However, the default retirement age exemption does not apply to partners in a partnership. In order to justify the inclusion of a mandatory retirement age in its partnership agreement, a firm must be able to demonstrate that this is a proportionate means of achieving a legitimate aim if it is to defeat a claim of age discrimination.
In Seldon v Clarkson, Wright & Jakes, the former senior partner of a firm of solicitors claimed that the provision in the partnership agreement that required all partners to resign at age 65 (although they could be kept on by agreement) was discriminatory.
The Employment Tribunal (ET) found that although the provision constituted direct age discrimination, it was justified. Of the six reasons put forward by the firm for having a mandatory retirement age, the ET considered the following to be legitimate objectives:
- To ensure that associates are given the opportunity of partnership after a reasonable period, thereby ensuring they do not leave the firm;
- To facilitate the planning of the partnership and workforce across individual departments by having a realistic long-term expectation as to when vacancies will arise; and
- To limit the need to expel partners by way of performance management, thereby contributing to the congenial and supportive culture in the firm.
In the ET’s view, the mandatory retirement clause was a necessary and proportionate means of achieving these objectives. The evidence supported the fact that it played a significant part in the retention of associates as it ensured there were clear opportunities for advancement. Furthermore, a principle whereby partners could be expelled for poor performance would not be consistent with the culture of congeniality. The mandatory retirement age ensured that underperforming partners close to retirement age were spared this indignity. As to why the compulsory retirement age was fixed at 65, the ET considered it not unreasonable to assume that on reaching this age some partners would not be able to make as great a contribution to the partnership as they had in the past.
Mr Seldon appealed on various grounds. In addition, the Equality and Human Rights Commission was permitted to make representations as it challenged what it held to be the discriminatory assumption relied on by the ET that once a person reaches age 65, there is a significantly greater risk that they will underperform.
The Employment Appeal Tribunal held that the ET was entitled to find that the principle of compulsory retirement was justified and achieved certain legitimate objectives. However, whilst the partnership could therefore adopt a ruling requiring all partners to retire at a particular age, they had not established any justification for fixing the mandatory retirement age at 65 because performance would most likely begin to deteriorate at around that age. There was no evidential basis for that assumption before the ET. As such, the particular objective of congeniality did not justify the rule. Whilst the default retirement age is 65 under the domestic law, that provision was adopted for labour market considerations, rather than because it is accepted that performance diminishes at that age.
The case was therefore remitted to the ET to consider the question afresh.