Employers can force retirement, court ruling suggests

26 February 2013

The Legislation

In October 2011 legislation came into force stopping UK employers from compulsory retiring workers once they reach the age of 65.  Employers instead have to show objective justification for dismissing an employee at 65 or any other set age for retirement.  This entails identifying a legitimate aim being pursued and showing that the means used to pursue it are proportionate.

This left employers in limbo, fearful of asking workers aged 65 or over to leave the business for fear of being accused of age discrimination.  However, the ruling from the Supreme Court has provided some clarity for employers in this regard.

The Facts of the Case

The facts of the case are as follows; Leslie Seldon, a partner at a Kent law firm, Clarkson Wright and Jakes, was told to retire by the firm just after his 65th birthday.  Mr Seldon wanted to continue working, but his request was turned down.  Mr Seldon claimed that the decision to make him retire amounted to age discrimination.  Part of Mr Seldon’s partnership deed was aimed at ensuring succession at the firm. 

In this matter his employers argued that the legitimate aim for its retirement policy were as follows:

  • Ensuring younger workers had the opportunity of becoming a partner after a reasonable period;
  • Facilitating planning by having a realistic long-term expectation as to when vacancies will arise;
  • Limiting the need to expel partners for poor performance.

Mr Seldon’s appeal was turned down indicating that fairness between generations was a legitimate aim for employers.

The Judgement

The judgement noted that all businesses will now have to give careful consideration to what, if any, mandatory retirement rules can be justified in their particular business.  However, this case signalled that this could include reasons of succession and letting workers go at a certain age because of poor performance, so not having to dismiss them.

It is worth noting that this matter was referred back to the employment tribunal to rule on whether 65 was an appropriate age for Mr Seldon to be told to go, the tribunal are yet to comment on this and so it remains unclear at this time what is the correct age to retire somebody.

What the decision means

Employers can gain comfort from the fact that they can rely on employment being shared among generations, and it is also legitimate to preserve the dignity of older workers by retiring them.

A spokesman for the Department of Business said:

“this decision confirms that businesses can justify a compulsory retirement age based on legitimate aims such as workforce planning, provided that this is proportionate.

While we do not expect this decision to fundamentally change the retirement policies of most businesses, we believe that this decision will give greater certainty to those businesses that have chosen to apply a retirement age.

Legislation has always allowed a business to impose a set retirement age, so long as it could be objectively justified.  This was the case while the default retirement age was in operation and remained the same following its abolition.  This decision has given some guidance as to when this may be acceptable”

The above is not legal advice; it is intended to provide information of general interest about current legal issues.

If you would like further information on this complex area of the law please contact the Employment team on 01245 228141  or deana@gepp.co.uk