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Seldon ruling could limit impact of end to default retirement age

2 August 2010

The government has committed itself to abolishing the default retirement age of 65 by October next year.

However, the move came only a day after the Court of Appeal ruled in the Seldon case that firms could justify compulsory retirement at 65 for business planning reasons, such as promoting younger staff.

Abolition of the default retirement age was a feature of the coalition agreement, and the previous government had promised a review, but the timing is earlier than expected.

Launching a consultation on the Employment Equality (Age) Regulations, which introduced the existing default retirement age (DRA) in 2006, employment relations minister Edward Davey said transitional arrangements would begin in April 2011.

“Although the government is proposing to remove the DRA, it will still be possible for individual employers to operate a compulsory retirement age, provided that they can objectively justify it,” he said. “Examples could include air traffic controllers and police officers.”

A spokesman for the Department of Business Innovation and Skills said the government also intended to remove all associated statutory retirement procedures, including the duty on employers to give a minimum of six months’ notice of retirement to employees and the right for employees to request to work beyond their retirement age.

The High Court ruled last year in the Heyday case that the UK’s default retirement age of 65 was not unlawful, though Mr Justice Blake said the case for raising the age was “compelling” (see Solicitors Journal 153/36, 29 September 2009).

Earlier the ECJ had ruled in the same case that that derogations from the ban on age discrimination could be lawful if they were “justified by legitimate social policy objectives, such as those related to employment policy, the labour market or vocational training”.

Meanwhile, Leslie Seldon, former senior partner at Clarkson Wright and Jakes in Kent, lost his claim at the Court of Appeal that a clause in the firm’s partnership agreement, which provided for compulsory retirement at 65, constituted unlawful age discrimination.

The Age Regulations, which implement the EU’s equal treatment directive 2000/78, ban age discrimination unless there are justifications based on legitimate aims. Seldon said that partnership rules at his old firm failed the ‘legitimate aims’ test.

Rejecting his arguments, Sir Mark Waller held in Seldon v Clarkson Wright and Jakes [2010] EWCA Civ 899 that a compulsory cut-off retirement age could be justified so people could “retire with dignity”.

Sir Mark rejected Seldon’s contention that this did not apply to partnerships, saying that compulsory retirement clauses in partnership agreements were lawful provided they were consistent with the UK’s social policy justification for the derogations.

Sue Ashtiany, special counsel at Nabarro, said the aim being fulfilled by the retirement age could be any legitimate aim and not merely the specific social policy aims mentioned in the EU directive.

“The court also took into account the special situation of partners who had equal bargaining power, and the fact that the age chosen is the same as the default age for employees,” she said.

Jo Davis, partner and head of employment at BP Collins, acted for Seldon at the EAT, before the case was taken over by the Equality and Human Rights Commission. She questioned what the point was of the government abolishing the default retirement age if the Seldon ruling stood.

“A company can have a fixed retirement age if the purpose is to provide employment for young people. All employers will be able to say that.”

Davis said the EHRC was considering whether to appeal to the Supreme Court.

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Discrimination Procedures Local government