In this judgment – probably the final chapter of the long-running Seldon case – the EAT held that the compulsory retirement age at 65 could be justified, and therefore legal.
Because compulsory retirement at the age of 65 amounts to direct age discrimination, in order for it to be legal, it needs to be “justified” i.e. be a “proportionate means of achieving a legitimate aim”.
Justification in this case was established on the following grounds:
- Retention. This case involved a law firm, and the Tribunal believed evidence that solicitors would not join practices if there were partners in their 70s and 80s with no definite exit date. They believed this would provide solicitors with very little incentive to stay or to join in the first place.
- Planning. The Tribunal agreed that the employer needed to be able to understand in advance when and where vacancies would arise through retirement.
Implications for businesses
The court relied heavily on the fact that when this claim was initially brought (some years ago) there was a default retirement age for employees who are not partners, of 65. This has now been abolished.
The court also relied heavily on the fact that, in this case, the retirement age had been agreed between the partners, who were on an equal negotiating footing. This would not apply to a compulsory retirement age imposed on most employees, where it is well understood that there is not equal bargaining power.
So this case will not apply in most situations, and compulsory retirement ages will still be hard to justify, although employers can take some encouragement from this decision. The imposition of any compulsory retirement age will need to be very carefully thought through and a coherent paper trail stored away in case of claims.