by Laurie Anstis on August 2, 2010
Last Wednesday, the Court of Appeal delivered its judgment in the case of Seldon -v- Clarkson Wright & Jakes, supporting the right of a partnership to forcibly retire a partner at 65.
On Thursday, the government announced its plans to abolish the right of an employer to compel an employee to retire at 65 or over.
The contrast between these two approaches was summed up in the front page headlines in the Daily Express and the Daily Mail for Thursday: “Workers can be forced out at 65” and “Now the right to work past 65“.
We have not as yet seen any draft legislation for the abolition of the employer’s ability to retire an employee. The government’s consultation (pdf) is not specific about how these plans will be carried out. The most obvious way of doing this would simply be to abolish the specific exemption in reg 30 of the Employment Equality (Age) Regulations 2006, which exempts retirement of an employee at age 65 or over from the prohibitions on age discrimination, and the procedures in Sch 6 which are required for the retirement dismissal to be fair. Para 7.2.7 of the consultation says that “objective justification” of retirement by employers will still be permitted, which suggests that compulsory retirement will still be permitted where it can be justified by employers, but without a specific exemption.
That put us in precisely the kind of situation dealt with in the Seldon case. The exemption for the retirement of employees at 65 has never applied to partners. The compulsory retirement of partners must be “objectively justified”, just as in the future the compulsory retirement of employees would have to be objectively justified.
The Seldon judgment is the authoritative statement (so far) of what is required for such justification.
In that case, the partnership had sought to justify the compulsory retirement by reference to two broad principles, categorised by the Court of Appeal as “dead men’s shoes” (ensuring associates at the firm had the opportunity of partnership after a reasonable period, and facilitating workforce planning by having some predictability about when vacancies might arise) and “collegiality” (limiting the need to expel partners by way of performance management). Either of those purported justifications (and particularly the latter) might be expected to apply equally to employees as to partners.
Sir Mark Waller gave the judgment of the Court of Appeal, and referred heavily to the previous judgments of the ECJ and the High Court in the Heyday case, which unsuccessfully challenged the UK government’s decision to exempt the retirement of an employee from age discrimination law.
He said (paras 21 – 23 of the judgment):
“… where a partnership is acting consistently with the social aim which has justified the legislative provision, it would be … to contradict that aim to render such a provision unlawful if the clause was a proportionate means of achieving the aim.
Accordingly [the challenge by Mr Seldon] directed at the legitimacy of the “dead men’s shoes” aim clearly fails. It is also in my view equally clearly fails in relation to the “collegiality” aim. It seems to me that an aim intended to produce a happy work force has to be within or consistent with the Government’s social policy justification for the regulations. It is not just within partnerships that it may be thought better to have a cut-off age rather than force an assessment of a person’s falling off in performance as they get older.
… my experience would tell me that it is a justification for having a cut-off age that people will be allowed to retire with dignity …
There is a very great difference between employees or partners who are under-performing but not by reason of age, and employees or partners who are doing their best but it is no longer good enough because old age has caught up with them.”
This begs a number of questions – how is it that Sir Mark Waller gets from his conclusion that the dead men’s shoes and collegiality arguments are legitimate aims (which arguably they are) to then apparently finding that the partnership’s requirements were a proportionate means of meeting that aim? Why is it that there should be a legal difference between under-performance that relates to age and other under-performance?
The first point is addressed to a certain extent later in the judgment, when Sir Mark Waller refers to reg 30 as supporting the idea that 65 is a proportionate cut-off date. Of course, under the new provisions reg 30 would not longer exist, but it is difficult to see that retirement of a partner at 65 could be proportionate at the end of September 2011 but not at the start of October 2011, when reg 30 is expected to be abolished.
On the second point, to the extent that the age-related under-performance relates to a medical condition, the medical condition may count as a disability for which reasonable adjustments should be made. Nevertheless, in a judgment that he specifically contemplated being wider than the partnership context, he has decided that “it may be thought better to have a cut-off age rather than force an assessment of a person’s falling off in performance“, and “it is a justification for having a cut-off age that people will be allowed to retire with dignity“.
The problem with the Seldon judgment, in the context of the government’s plans, is that there is no real room for distinguishing between the justification given by the partnership for retiring Mr Seldon at 65 and the justification any employer would give for retiring any employee at 65.
Mr Seldon’s case had the support of the EHRC, and it seems to me that it is inevitable that they will seek permission to appeal to the Supreme Court so as to avoid the Court of Appeal judgment as being a precedent which suggests that compulsory retirement at 65 is justified irrespective of the abolition of the specific exemption for employees. BIS intervened in the Seldon case. It is not clear from the judgment what the nature of their submission was, but presumably they will not now have any interest in supporting the partnership’s approach to this case.
Unless the Court of Appeal’s judgment is overturned, the abolition of the default retirement age may well just be an academic exercise – retirement at 65 can continue as normal, on the basis that it is justified.