Will they still love you when you're 65?

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Will they still love you when you're 65?

The implications of the removal of the default retirement age for all employees from October 2011 are starting to focus the minds of many employers now as to how they might be able to justify a mandatory retirement age.  Apart from those employees whose ability to continue beyond a certain age are curtailed by regulatory or statutory requirements, it is not going to be easy for an employer to lawfully impose a mandatory retirement age.

A mandatory retirement age will be directly discriminatory on the grounds of age, and therefore an employer will have to go through the hoops of showing that the retirement age was justified. To do so, they must show that it was a “proportionate means of achieving a legitimate aim”. But what does this mean exactly? A couple of recent cases from the Court of Appeal and the European Court of Justice shed a little more light on the potential reasons employers might try and advance to justify their mandatory retirement ages.

The snappily named case of Rosenblatt v Oellerking Gebaudereinigungsges mBh concerned the compulsory retirement age of 65 in a German contract of employment.  The ECJ decided that the retirement age could be justified on the basis that the retirement age had been collectively negotiated with a trade union; the employees were to receive a significant financial cushion in the form of a generous pension; and that compulsory retirement had been widespread at 65 in the country for some time.  The latter reasoning by the ECJ appears to be directly opposed to the whole rationale of removing the mandatory retirement age, and it is likely UK tribunals may be very reluctant to follow this argument.

Closer to home the Court of Appeal has finally clarified objective justification in the case of Seldon v Clarkson Wright and Jakes (CWJ).  Although this case concerned a partner rather than an employee, the principles are expected to be relevant regardless of whether the individual is an employee, worker, partner etc.

Mr Seldon was a partner in the law firm of CWJ and was compulsorily retired in accordance with their Partnership Agreement at 65. He challenged this on age discrimination grounds.  After a number of years doing the rounds of the Employment Tribunal and Employment Appeal Tribunal, the Court of Appeal has now held the following to be legitimate aims:
  • by compulsorily retiring partners at 65 this meant associate solicitors were more likely to be retained as they would see that partnership was a more realistic opportunity within a reasonable timeframe as opposed to having to wait for partners to leave when they wanted
  • the 65 retirement age meant that partners did not have to be expelled through the Partnership Agreement or through performance measures and that a “more congenial and supportive workplace culture” could be achieved by a more structured process
  • allowing partners to retire with dignity amounted to a justification for the mandatory retirement age, and an employer’s aim of producing a happy workforce is consistent with government social policy objectives
Whether Tribunals do take a relatively liberal view of retirement ages post-October 2011 remains to be seen, but the message is that employers must give some thought now as to why they actually might need a particular retirement age. Given that the current statutory retirement procedure is soon disappearing, we would recommend that this is something that goes to the top of HR teams’ lists of New Year resolutions.

Published: 15 Dec 2010

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