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Supreme Court provides ruling on compulsory retirement age

Posted: 4th May 2012   In: Business Employment

The Supreme Court has ruled that an employer can operate a compulsory retirement age if it is “founded on legitimate social policy aims”.

The case involved solicitor Leslie Seldon who was a partner at a law firm. In 2006, he was obliged to retire at the age of 65 under provisions contained in the firm’s deed of partnership.

Mr Seldon claimed that this was direct discrimination on the grounds of age.

His firm submitted that the law allows for an exception if the alleged discrimination is “objectively and reasonably justified by a legitimate aim”.

The means of achieving such an aim have to be “appropriate and necessary”.

The firm argued that its actions met those conditions. Its retirement policy allowed promotion opportunities for junior staff, which encouraged them to stay with the firm. The policy also “limited the need to expel underperforming partners”. This encouraged a “congenial and supportive culture” within the firm.

The case went all the way to the Supreme Court, which ruled against Mr Seldon. It held that the compulsory retirement age was directly discriminatory but it could be justified as being in the public interest as it was based on a “legitimate social policy aim” which could be described as “inter-generational fairness”.

However, the court then said the case should be remitted back to the employment tribunal to see if the firm’s selection of the specific age of 65 was a proportionate means of achieving those aims in these particular circumstances.

Legal commentators have been quick to point out that this does not give a green light for employers to have a compulsory retirement age. Each case will depend on the individual circumstances and a firm would still have to pass a number of challenging tests to justify a compulsory retirement age.

In giving the lead judgment in the case, Lady Hale stressed that even legitimate aims would have to be justified within the context of the firm involved. She said: "Improving the recruitment of young people, in order to achieve a balanced and diverse workforce, is in principle a legitimate aim."

"But if there is in fact no problem in recruiting the young and the problem is in retaining the older and more experienced workers then it may not be a legitimate aim for the business concerned."

Firms should still tread carefully and seek legal advice before considering a compulsory retirement age.

Please contact Robert Bedford or Mark Pelopida if you would like more information about the issues raised in this article or any aspect of employment law.