Supreme Court rules on Mandatory Retirement

Wednesday, April 25, 2012 Print Email

The UK Supreme Court has made a landmark ruling that allows companies to dismiss older workers at 65 to make way for more entry-level jobs and younger staff scaling the career ladder.

The long-awaited ruling - the first time the "public interest" defence has been applied to age discrimination law, will, legal eagles believe, give the go-ahead to employers to reinstate a mandatory retirement age. It follows the introduction of new legislation last October removing the default retirement age (DRA).

The court deemed it acceptable for a City law firm to force a partner, Leslie Seldon, to retire when he hit 65.

The firm - Clarkson, Wright & Jakes - said retiring all partners at 65 was acceptable as it ensured associates could move up the ranks to partnership level and gave employees reasonable expectations on when senior vacancies would arise.

Given the high unemployment figures, especially among the young, it is in the public interest for older staff to retire to open up positions for younger people, the judgment intimated.

But, to fulfill the public interest defence, employers would need to garner significant evidence to prove they had actually opened opportunities for younger workers to rise up the ranks.

The Supreme Court justified CWJ’s retirement age policy, but failed to reach a verdict on whether the retirement age of 65 in Mr Seldon's case was justified.

The case will go back to tribunal on this point, the judgment said.

The Selsdon ruling comes on the same day as Homer v Chief Constable of West Yorkshire Police.

Croner legal expert Richard Smith said: 'Both cases demonstrate that the use of age directly or indirectly will amount to age discrimination unless objectively justified. Seldon shows that it may be theoretically possible to justify a retirement age; but to do so will not be easy. The justification must be of measures that were appropriate, necessary and proportionate and if there are non discriminatory measures that would achieve the same outcome this will undermine justification.

'So in Seldon the justification for a compulsory retirement of maintaining dignity by avoiding performance management of older workers may not succeed if there are alternative means such as fair procedures to achieve the same goal; or if there is no evidence to prove that this does allow younger workers to progress the case may fail on its facts.

'Firms would not be well advised to implement compulsory retirement ages but should manage older workers based on actual performance not assumptions based on age,' he added.

Adrian Hoggarth, head of employment at law firm, Prolegal, gave a cautious welcome to the ruling. He said: ‘The case provides some welcome clarity for employers, who have understandably been nervous about compulsory retirement since the repeal of the default retirement age.

'However, given that the issue of proportionality has been remitted to the tribunal we are left with some uncertainty as to when particular retirement ages are justified.

‘Employers and partnerships will need to draft retirement policies carefully to explain the need for the retirement age as those policies will need to be proportionate. It is vital that employers consider the effect on older workers of any compulsory retirement age they set and look at the alternative options.’

The case comes at a time of high youth unemployment and an ageing population who feel they need to work longer to support poorly-performing pension plans.

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