Age Discrimination - justification of compulsory retirement at 65

Two Employment Tribunals have handed down judgments reaching different conclusions on whether compulsory retirement at 65 amounts to discrimination on grounds of age.

There is an exception to unlawful discrimination in the Employment Equality (Age) Regulations 2006 for retirement at 65 or over but this applies only to ‘employees’ and not to partners or office-holders. Their retirement at a particular age must therefore be objectively justified in order to provide a defence to a finding of direct discrimination. Compulsory expulsion from partnership at the age of 65 was found to amount to less favourable treatment but could be justified, whereas the forced retirement of a part-time judge at 65 could not. The cases are very fact specific, but give some guidance to organisations who retain categories of individuals to whom the default retirement age of 65 set out in the Regulations does not apply, and to employers who are seeking to objectively justify a retirement age below 65.

In Seldon v Clarkson, Wright and Jakes, the Ashford Employment Tribunal found that the compulsory retirement of a partner from a firm of solicitors at the age of 65 amounted to an expulsion from the partnership and so was within the ambit of the Regulations. The firm accepted that the expulsion from the partnership was a difference of treatment on grounds of age, and had to be objectively justified to prevent a finding of discrimination. The firm therefore had to show that the treatment was a proportionate means of achieving a legitimate aim.

The Tribunal accepted the firm’s argument that the treatment had legitimate aims of:

• ensuring that associate solicitors are given an opportunity of partnership after a reasonable period thereby ensuring that the associates do not leave the firm;
• facilitating the planning of the partnership and workforce across individual departments by having a realistic long-term expectation as to when vacancies will arise;
• and limiting the need to expel partners by way of performance management thus contributing to the congenial and supportive culture of the firm,

and that compulsory retirement after reaching 65 achieved these aims. Such aims will not apply to all partnerships or other organisations- some firms do expel partners on performance grounds and not every firm will be able to successfully argue that a main priority is to retain its congenial atmosphere. Moreover, not every firm seeks to achieve growth, whereas the literature of this firm showed that this was part of its strategy.

In assessing whether the compulsory retirement was a proportionate means of achieving the legitimate aims, the Tribunal considered the effect of the treatment. A significant factor in their decision that the treatment was proportionate was that the compulsory retirement did not occur without warning, partners have an opportunity to plan for retirement, and retirement at 65 was agreed by the partners and was not reconsidered after the introduction of the Regulations. The partner in question had been a partner at the firm for 34 years and had been Managing Partner at one time, and had agreed to the 1992 and 2005 partnership deeds, both of which contained the condition that partners retire after reaching 65 and he did not question this. In the Tribunal’s view, these factors lessened the extent of any adverse impact.

In Hampton v (1) The Lord Chancellor and (2) the Ministry of Justice (as in Seldon) it was conceded that there was less favourable treatment and so the case hinged on whether this could be justified. The case concerned the compulsory retirement of fee-paid judges at 65 rather than 70 (the age of retirement for most other judicial office holders). Fee-paid judges can subsequently be appointed as salaried judges. Eligible fee-paid judges form a ‘pool’ from which appointments to salaried judicial offices can be made. London South Tribunal accepted that the compulsory retirement of fee-paid judges at 65 had the legitimate aim of maintaining a reasonable flow through of candidates for appointment to salaried offices into this selection pool.

Unlike in Seldon, the Tribunal did not consider that the method used was a proportionate means of achieving the legitimate aim. The Ministry of Justice argued that as fee-paid judges have to commit to a two to five year term to be appointed to a salaried judicial office and the retirement age for these salaried posts is 70, most fee-paid judges between 65 and 70 would not be candidates for appointment. Their continuing status as fee-paid judges would also prevent the recruitment of younger fee-paid judges, who would by contrast be in the pool for appointment. The size of the pool of individuals eligible for appointment as salaried officers would therefore be decreased. The tribunal disagreed, as this ignored the fact that not all fee-paid judges would choose to remain in office until the age of 70, and that when fee-paid judges were appointed to salaried posts this would allow for the recruitment of new fee-paid judges. In addition, not all fee-paid judges were in the pool for appointment anyway as some did not meet other eligibility requirements and so new fee-paid judges could have been appointed (increasing the size of the pool) by removing them from office. The Tribunal also found that even if the pool would be decreased by allowing fee-paid judges to stay in office until 70, it was still a sufficiently large pool from which to make appointments. Moreover, a decrease in the opportunities for appointment as a fee-paid judge would increase competition and mean those eligible to be appointed to a salaried office would be of a higher calibre. Crucially, the Tribunal found that the Ministry had recently wanted to reduce the total number of fee-paid judges, which undermined their arguments that the pool would not yield enough people to be promoted. The Tribunal also did not accept that raising the retirement age to 70 would mean that those in the pool would be prevented from gaining sufficient experience to be considered for salaried appointments.

These are only Employment Tribunal cases and so do not set a legal precedent. It is possible that they may be appealed. Moreover, the Tribunal in Seldon stated that "Any determination by the Tribunal in relation to objective justification does not lay down a general rule in relation to partnerships as different considerations apply in every case." They do however highlight the importance of the justification defence in age discrimination claims, and that Tribunals will not be afraid to scrutinise the justifications advanced. Employers and organisations must tailor such defences to their own organisations rather than relying on ‘stock’ lists of legitimate aims and show the means used to achieve them are reasonably necessary. Employers should consider whether they would be able to objectively justify any potentially discriminatory policies prior to introducing them.