Firms 'must abandon fixed retirement ages' after Seldon

Leslie Seldon, former senior partner at Kent firm Clarkson Wright & Jakes, has lost his age discrimination appeal at the Supreme Court. Seldon wanted to stay with the firm as a consultant or salaried employee.

An employment tribunal will now decide whether 65, the age at which Seldon was required to retire under the firm's partnership deed, was justifiable.

Lady Hale and Lord Hope gave strong hints that it was, given that Seldon retired in 2006, when the default retirement age of 65 was still in existence.

However, Michelle Chance, employment partner at Kingsley Napley, said her advice to partnerships and LLPs, to minimise the risk of age discrimination claims, was to remove any mandatory retirement age from their agreements.

She said firms should instead strengthen the power of their management committee 'to remove a partner at any time for any reason'.

Chance went on: '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.'

John Wadham, general counsel at the Equality and Human Rights Commission, said every employer should think carefully about 'whether it really needs' to have a policy that directly or indirectly discriminates against people based on their age. 'The court has made it clear that such policies must be justified on a case-by-case basis,' he said.

'An employer or partnership must be sure that the same aim could not be achieved using a less discriminatory approach.'

But Clive Howard, employment partner at Russell Jones & Walker, said the decision in Seldon was disappointing, given the recent abolition of the forced retirement age.

'This would appear to undermine the government's decision to abolish retirement ages in the first place,' he said.

'However, employers should not form the view that this means it will be lawful to force staff to retire at 65 up and down the country. There were specific factors which applied to this small law firm in Kent which will not be relevant to every organisation.'

Martin Warren, head of the HR practice group at Eversheds, said it was now clear that direct age discrimination was permitted by employers 'where the aim is inter-generational fairness and/or retirement with dignity'.

Warren said other grounds were not excluded if they were in the public interest on employment policy, labour market or vocational grounds.

He said such aims must be 'legitimate in the particular circumstances of the employer's case' and not be invoked as a general defence.

Giving the leading judgment in Seldon v Clarkson Wright & Jakes [2012] UKSC 16, Lady Hale said that three of the firm's aims in retiring Seldon had been recognised as legitimate by the ECJ.

These were ensuring that associates had the opportunity of partnership, facilitating workforce planning by having realistic expectations about vacancies, and limiting the need to expel partners by performance management to encourage a 'congenial and supportive' culture.

'The employment tribunal did not unpick the question of the age chosen and discuss it in relation to each of the objectives,' Lady Hale said. 'It would be unduly constraining to deny them the opportunity of doing so now.

'I would emphasise, however, that they are considering the circumstances as they were in 2006, when there was a designated retirement age of 65 for employees, and not as they are now.'

Lords Brown, Mance and Kerr agreed with her that Seldon's appeal should be dismissed. Lord Hope agreed, for his own reasons.