Supreme Court decides test case on age discrimination

Can an employer still require senior staff to leave at their retirement date asks Howard Robson, Employment Partner.

The Supreme Court in Seldon V Clarkson Wright & Jakes has reached a landmark judgment on this area of law by clarifying the grounds on which age related discrimination might be justified.

The default retirement age was swept away in 2011, since then any retirement must be legally justifiable.  This important case has helped clarify matters but some uncertainty remains.

Mr Seldon was a partner in a law firm and was dismissed at the age of 65.  His contract permitted retirement at that age but he had the benefit of legislation which required the employer to justify retirement due to it being age discriminatory.  The Equality Act 2010 makes age discrimination unlawful except on limited grounds.

There is a distinction between ‘direct’ and ‘indirect’ discrimination.  If an individual is dismissed at a certain age that is ‘direct’ discrimination.  Indirect discrimination occurs when an individual may be unable to achieve say a certain qualification or level of fitness due to their age.

Any employer retiring an individual must show it was appropriate and justifiable within the law. Thus if the employer has a legitimate aim in adopting a retirement age it must show that the dismissal was proportionate to achieving that aim.

The firm argued that the ‘legitimate’ aims were to: avoid disputes over performance; provide promotion opportunities; workforce planning and that having a retirement age would ‘contribute to a congenial and supportive culture’.  After appeals to the Employment Appeal Tribunal and Court of Appeal Mr Seldon pursued the matter further.

The Supreme Court had to decide three issues:

(i)     whether any or all of the reasons for a retirement age were legitimate aims for the purposes of justification of direct age discrimination;

(ii)    whether the firm had to justify both the retirement clause generally and its application to Mr Seldon; and

(iii)   whether the Tribunal was correct to conclude the clause was a proportionate means of achieving any or all of aims of the retirement policy.

In a key element of the decision the Supreme Court decided that different tests should apply for ‘direct’ and ‘indirect” discrimination.  Direct can only be justified if the aims have ‘social policy objectives’ such as being related to employment policy, the labour market or vocational training. The aims of the firm were accepted as legitimate and it was decided that given social policy reasons were shown then the aims were justified subject to the means to achieve them being ‘appropriate and necessary’.

The Supreme Court indicated that a business relying upon a retirement clause would have to justify its existence at the time the retirement was proposed.

The Supreme Court decided that the decision as to whether dismissal was proportionate remains a matter to be decided by the tribunal on the facts.

Whilst establishing a ‘legitimate aim’ may now be easier for employers they must still show that the retirement age is ‘proportionate’ to that aim.

Employers will need to think very carefully about the reasons for a retirement age and also carefully balance the justification at the time of retirement as against the specific impact on the individual. Further case law will doubtless follow on the issue of proportionality in years to come.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.