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Supreme Court rules compulsory retirement may be justified in UK

Partnerships should consider whether age limits are proportionate

26 April 2012

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By Manju Manglani, Editor (@ManjuManglani)

In the landmark case Seldon v Clarkson Wright & Jakes, the Supreme Court has ruled that compulsory retirement may be justified as a means of workforce planning and succession planning, but rejected the assumption that 65 is a justifiable retirement age in itself.

The issue originated from a claim of age discrimination brought by Leslie Seldon against the law firm Clarkson Wright & Jakes, from which he had been forced to retire as a partner at the age of 65.

The Court of Appeal had upheld the firm’s claims that the retirement was a proportionate means of:

  1. ensuring associates had the opportunity to obtain partnership after a reasonable period of time;

  2. facilitating long-term workforce planning by having realistic expectations about vacancies; and

  3. limiting the need to expel partners by performance management to encourage a “congenial and supportive” culture.

The Supreme Court subsequently dismissed Seldon’s appeal and remitted the issue of whether it was proportionate to set the age limit at 65, as opposed to another age, to the employment tribunal.

Implications for law firms

So what does this mean in practical terms for partnerships?

“For partnerships, the case provides reassurance that their pyramid structures can justify a set retirement age to ensure staff can progress up the ranks. However, it’s unclear whether lower retirement ages, say 60 or 65, which may exist in some firms, would also be acceptable,” says Ed Stacey, head of employment and pensions at PwC Legal.

“Any retirement age agreed between partners and members will have a better chance of being considered proportionate than for arbitrary compulsory retirement ages which might be unilaterally imposed onto employees,” notes Emma Bartlett, an employment partner at Speechly Bircham.

Michelle Chance an employment partner at Kingsley Napley, suggests taking a different approach. “My practical advice to professional partnerships, to minimise the risk of successful direct age discrimination claims being brought against them, would be to remove any mandatory retirement age from their partnership or LLP members’ agreement and instead strengthen the power of the firm’s management committee to remove a partner at any time for any reason,” she says.

“Such a decision should not have to be put to a majority vote of the partnership and the management committee should be empowered to agree such retirement terms with the partner in question as they deem to be in the best interests of the firm, taking account of the partner’s individual circumstances.”

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