The long-running saga of whether a law firm could justify requiring an equity partner to retire at the age of 65 finally reached a conclusion at the Employment Tribunal on 28 May.

Applying the principles in the Judgments of the Court of Appeal and the Supreme Court, the Tribunal rejected the claim of Mr Seldon, in Seldon v Clarkson Wright & Jakes. It found that attracting and retaining talented solicitors and facilitating workforce planning were legitimate aims and that the imposition of a retirement age for partners of 65 struck an acceptable balance between the needs of the firm and the individual partner. Rachel Dineley, Employment Partner and Head of the Equality and Discrimination Unit at international law firm DAC Beachcroft, commented: “The Tribunal’s decision is both expected and welcome. It will provide comfort to a wide range of businesses where, in appropriate circumstances, there is a clearly perceived need to impose a retirement age, notwithstanding the abolition of the default retirement age in 2011. It does not provide a carte blanche for employers to introduce their own retirement age in the absence of clear justification. What will be justifiable is contingent upon the employer establishing a legitimate aim or aims and demonstrating, both with tangible evidence and the application of common sense (but without stereotyping) that the retirement age is appropriate and reasonably necessary to achieve those aims.

Following the abolition of the default retirement age, employers will be able to make an assessment, over time, as to whether the introduction of their own retirement age is warranted, either for particular categories of employee (such as management grades) or for their workforce as a whole. For the time being, however, employers have learned to live with the absence of a retirement age for their staff. Partners in partnerships were never subject to the default retirement age under the 2006 Age Regulations and, subsequently, the Equality Act 2010. Partnerships, in particular, will want to examine the Tribunal’s judgment to assess whether any retirement age stipulated in their Partnership Deed or Membership Agreement now needs to be revisited”

Rachel added: “The essentials of the Tribunal’s judgment were as follows: the determination as to whether the firm had directly discriminated against Mr Seldon on grounds of his age had to be made by reference to the date on which the relevant treatment was applied to him, ie, 31 December 2006, when he was required to retire under the terms of the Partnership Deed. While the mandatory retirement age could not be justified on the basis of the desire to limit the need to expel partners by way of performance management, thus contributing to the congenial and supportive culture in the firm, the firm was clearly justified in seeking to ensure (a) that associates were given the opportunity of partnership after a reasonable period (thereby ensuring that they did not leave the firm) and (b) the planning of the partnership and workforce across individual departments could be undertaken by having a realistic long-term expectation as to when vacancies would arise.

In assessing whether these two aims were achieved by proportionate means, the Tribunal considered whether the selection of age 65, specifically, was warranted. Mr Seldon himself described the age as “a reasonable target” and it was not an age with which any of the partners had disagreed. Furthermore, the partners were in an equal bargaining position when they consented to the inclusion of the rule in their Partnership Deed. The Tribunal made clear that there has to be a balance between the needs of the firm and of the partners and associates. Along the way, they took account of the fact that Mr Seldon had consented to the retirement age and noted that at the relevant time (December 2006) the default retirement age for employees was 65, when salaried partners and associates could be required to retire. This was thought to be helpful. The fact that the State pension age was 65 for men (and earlier for women) was relevant although not a significant factor.

As in all cases of objective justification of direct age discrimination and all indirect discrimination, a complex balancing exercise is needed, which takes proper account of all relevant factors and weights them appropriately. In this case, the Tribunal found there is a narrow range of retirement ages – perhaps from 64 to 66 – any one of which would achieve the two identified aims. It was noted that the position might be different if the relevant date had come after the abolition of the default retirement age and after the planned changes in the State pension age. There is, no doubt, scope for further argument and potential for more case law as the impact of the abolition of the default retirement age is felt. Partnerships, in particular, will want to examine the Tribunal’s judgment, to assess whether any retirement age stipulated in their partnership deed or membership agreement now needs to be revisited. No two businesses will be the same. Careful analysis of a wide range of factors, from the age profile of the partnership or membership, through to medium to long term business planning, will be necessary to assess and address the risks associated imposing retirement at a specified age.”