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Newsletter – yes to compulsory retirement at 65 says the Court of Appeal

As noted in our last item, on the same day as the government announced its plans to abolish the default retirement age, the Court of Appeal handed down a judgment holding that (on the facts of the particular case before it) a partnership was justified in requiring a partner to retire at age 65. The partnership concerned had therefore acted lawfully and was not in breach of the Age Regulations.

That decision will develop into one of very considerable significance if the government poceeds with its plan to abolish the default retirement age as noted in our previous item.

Solicitor Mr Seldon was senior partner of law firm Clarkson, Wright & Jakes. A clause in the firm’s partnership agreement provided that partners had to retire at age 65. Mr Seldon reached 65 but didn’t want to retire. His partners required him to do so, pointing to the clause in the partnership agreement. He sued on the basis that the clause was unlawful in that it contravened the Employment Equality (Age) Regulations 2006 SI 2006/1031, pointing out that the age 65 “default retirement age” exception allows employers to require an employee to retire at age 65 but does not apply to partners in a partnership. In reply, his former partners agreed that point but argued that they were justified in requiring him to retire. This, they argued was a “proportionate means to achieve a legitimate aim” and therefore was lawful under the regulations even though they could not make use of the “default retirement age” provision.

An employment tribunal agreed that the partners were objectively justified in requiring Mr Seldon to retire. Doing so was a proportionate means of achieving the following legitimate aims:
(a) ensuring that associates were given the opportunity of partnership after a reasonable period as an associate, thereby ensuring that they do not leave the firm;
(b) facilitating the planning of the partnership and workforce across departments by having a realistic expectation as to when vacancies will arise, and
(c) limiting the need to expel partners by way of performance management, thus contributing to the congenial and supportive culture in the firm.

Various complications followed. For example the Tribunal also found that the partnership was justified in fixing the relevant age at which the partners should be retired at 65 because performance would drop off at around that age. Mr Seldon appealed to the Employment Appeal Tribunal and won – but only on this last point. The EAT remitted the case back for rehearing. At the same time related issues were being considered by the European Court in the context of deciding whether the part of the 2006 Age Regulations which allows an employer to require an employee to retire at age 65 (subject to fulfilling conditions) was compatible with EU law.

To cut a long story short, Mr Seldon was allowed to bring an appeal to the Court of Appeal. In essence the Court of Appeal agreed with the original employment tribunal and so Mr Seldon lost.

The judgment is likely to become increasingly important. The government’s plan to abolish the “default retirement age” will mean that the same defence of justification will soon become the main defence open to employers who dismiss an employee who reaches a particular age, just as it was the main defence for the partners of Clarkson, Wright & Jakes in the claim brought against them by Mr Seldon.

Two particular points arising from the Court of Appeal’s judgment are worth special note:
• the fact that Mr Seldon was a senior solicitor well capable of looking after himself meant that the existence of the “age 65” provision in the partnership agreement could be seen as an agreement negotiated between parties of equal bargaining power. That will not generally apply in employer/employee cases.
• secondly, and more helpfully for employers, in order to objectively justify a requirement that a person must retire at a particular age (which need not be 65), the legitimate needs of the business are relevant but general considerations of the public interest, such as employment policy, labour market and vocational training objectives are not relevant. Those public policy considerations had been important when the European Court was considering whether the default retirement age provision in the 2006 Age Regulations contravened EU law (in the Heyday case noted in the previous post) but they are not relevant in considering whether a private business is justified in requiring an individual to retire at a particular age. .

Martin Malone

By Martin Malone

I'm a solicitor and the chief operating officer at Canter Levin & Berg. I was formerly head of the employment department.
I maintain this website so if you have any suggestions, criticisms or recommendations please email me at martinmalone@canter-law.co.uk.
Outside work my interests include national hunt horse racing, France and French wine and current affairs. I also design and maintain websites.