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GN Law Media: Supreme Court ruling on compulsory retirement

On 25th April the Supreme Court dismissed the appeal in Seldon v Clarkson Wright and Jakes, a case in which Mr Seldon brought a claim for age discrimination after he was forced to retire at the age of 65.

In unanimously dismissing Mr Seldon’s appeal the Supreme Court seemingly reopened the door for employers to dismiss workers due to their age. In October 2011 Government legislation came into force preventing employers compulsorily retiring workers once they reach the age of 65. However the Supreme Court’s judgment set out the grounds on which it will still be permissible for employers to maintain a retirement policy.

Mr Seldon was a former civil litigation equity partner at Kent firm Clarkson Wright & Jakes (CWJ) before being made to retire under the terms of his partnership agreement. Mr Seldon argued before the Employment Tribunal, Employment Appeal Tribunal, the Court of Appeal and the Supreme Court, unsuccessfully on each occasion, that the actions of his former employers amounted to direct discrimination.

Employers still have many hurdles to pass before employees can be made to retire through age related grounds. It’s not just a matter of justification, there must be reasons related to social policy and public interest as well. The Supreme Court said that in order to justify direct discrimination, the ‘legitimate aim’ relied upon must be a social policy objective and have a public interest, not just something relevant to a private business, such as preserving profits. For example, a legitimate aim may be the need for “intergenerational fairness”, i.e. the importance of giving the younger generation an opportunity to progress through the ranks.

One of the difficulties with the Seldon judgment lies in defining what can and cannot be a ‘legitimate aim’. While the Supreme Court provided the above guidance, differentiating between public and individual interest, there is no definitive list of grounds on which an employer can rely. Employers will have to decide from themselves if there is sufficient social policy and public interest reasons when formulating their retirement policies.

Employers must have evidence to show that the legitimate aim relates directly to their business. Then finally, the employer will need to be able to show that the particular retirement age chosen is proportionate in the circumstances. Why, for example, would you retire an employee at 65 rather than 64 or 66, particularly now that the default retirement age no longer applies?

The reaction to the decision has been mixed from both supporters and detractors of the current legislation.  

For some, the decision has been welcomed as an economic necessity, pulling back from overly restrictive legislation. With record levels of high youth unemployment and fragile growth in the economy, the decision has been seen as a much needed means of providing more employment opportunities for young people.

For the supporters of the legislation against compulsory retirement the decision has been met with mixed reaction. For some the decision is an unacceptable step back and a blow for older workers, going against the very principle that employers can discriminate on age related grounds. For others the decision cements the law against discrimination into place while providing much needed guidance on the narrow means employers can rely on to dismiss due to age.

It would seem highly likely that the issue of compulsory retirement will see further litigation. Issues of how an employer links a retirement policy to their business and how a policy may be proportionate are far from clear and further guidance will most likely be required.

For Mr Seldon he states that he will not be taking the case to Europe.

Christopher Marchment

Paralegal, 11.06.12

Posted on Wednesday, 11th July 2012