Justification of employer compulsory retirement ages

Since the statutory default retirement age of 65 was repealed in April 2011 employers have been able to set compulsory retirement ages for their own workforces, provided that they are objectively justified. The Supreme Court decision in the case of Seldon v Clarkson Wright and Jakes give useful clarification of the tests that employers must meet in order to justify a compulsory retirement age.

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Since the statutory default retirement age of 65 was repealed in April 2011 employers have been able to set compulsory retirement ages for their own workforces, provided that they are objectively justified. The Supreme Court decision in the case of Seldon v Clarkson Wright and Jakes give useful clarification of the tests that employers must meet in order to justify a compulsory retirement age.

The setting of a mandatory retirement age constitutes direct age discrimination, but is capable of objective justification where an employer can show that the use of compulsory retirement at a fixed age is a proportionate means of achieving a legitimate aim.

Direct age discrimination is the only category of discrimination in which objective justification is available as a defence and the Supreme Court has defined the test for objective justification of direct age discrimination more narrowly than applies in cases of indirect discrimination.

The “legitimate aim” that an employer is pursuing must be capable of being viewed as a “public interest” aim rather than an aim which is relevant to the particular business. In the Seldon case Mr Seldon was a partner in a law firm which required all partners to retire at the age of 65 in order to provide opportunity for younger members of the firm to progress to partnership and thus increase retention of talent. The Supreme Court held that this aim had the necessary quality of public interest, since it sought “intergenerational fairness” and also “dignity” in avoiding the need for performance management of older workers. However the Supreme Court emphasised that employers must show that any “public interest” aim they rely on is legitimate in the context of their particular business. Mr Seldon’s former law firm was a relatively small organisation, it does not necessarily follow that larger businesses would be able to make a successful argument for compulsory retirement based on the same aims.

Although the Supreme Court was satisfied that Mr Seldon’s firm was pursuing a legitimate aim with its policy on compulsory retirement at 65, it ruled that the employment tribunal must reconsider whether the second part of the test of objective justification, proportionality, was satisfied. To succeed in defeating his claim for age discrimination, Mr Seldon’s former firm will now be required to show that its imposition of a compulsory retirement age of 65 was both appropriate and necessary, there being no less discriminatory ways of achieving the aim.

Although most employers have not attempted to establish their own compulsory retirement ages since the abolition of the statutory default retirement age, as the UK workforce continues to age and people live and work longer, more businesses may find themselves considering compulsory retirement ages in pursuit of aims such as intergenerational fairness. While the test of objective justification is rightly difficult to meet, employers will be assisted in satisfying its requirements if they can provide evidence of the impact on their business of operating without a compulsory retirement age, no doubt something that many HR departments are already developing metrics to track.

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This news item is not intended as a comprehensive summary of the subject matter and does not constitute legal advice. Parties are advised to obtain professional advice addressing individual facts and circumstances before acting on this information.