In Seldon -v- Clarkson Wright & Jakes, the Supreme Court has ruled that a mandatory retirement age in a partnership agreement can be justified age discrimination. The Court held that the aims pursued by the firm in adopting a mandatory retirement age, namely, staff retention, workforce planning and limiting the need to expel partners through performance management, were legitimate aims capable of justifying direct age discrimination in general and a mandatory retirement age in particular.

The Supreme Court held that there are two different kinds of legitimate objectives that have been sanctioned by the European Court, namely, inter-generational fairness and dignity. The former encompasses recruitment, retention and the sharing of the working lifecycle between generations; the latter refers to the more controversial aim of avoiding the need to dismiss for incapacity or under-performance. However, whilst we now have some clarity on the issue of legitimate aims, this is only one part of the justification defence. The case has now been remitted all the way back to the Employment Tribunal to decide whether on the specific facts a mandatory retirement age of 65 was an appropriate and necessary means of achieving the legitimate aims in the particular circumstances. So Mr Seldon could still win!

Whilst this has been heralded as a landmark case, its significance to the workforce at large has been over-stated as, since the abolition of the default retirement age, most employers have now abolished fixed retirement ages and it is inconceivable that they would re-introduce them now. The case is of greatest significance to other partnerships which still have set retirement ages in their partnership deeds.
On the positive side, this decision provides employers with some comfort that facilitating recruitment and promotion can be legitimate aims although the Court pointed out that this may not always be the case, for example, if conditions in the job market change and there is no problem in recruiting the young but the problem is in retaining the older and more experienced workers. In addition, the more controversial “dignity” aim will be far more difficult to rely on, particularly if the employer already has sophisticated performance management procedures in place as it is not likely to be justifiable to disapply them to facilitate retirement. On the flip side, it still begs the huge question of whether 65, 67, 70 or indeed any other age can be justified as both appropriate and necessary to achieve those aims. This will require careful assessment of the reasons behind the compulsory retirement policy and consideration of whether there are other, less discriminatory, measures which would achieve the same aims. Compulsory retirement will therefore remain extremely high risk for employers. Employees who are forced to retire are likely to feel that they have nothing to lose by pursuing a Tribunal claim, particularly as compensation for unlawful discrimination is unlimited.