Supreme Court case ruling could allow employers to set own retirement age

The Supreme Court has rejected an appeal made by an employee at law firm Clarkson Wright and James who was told he had to retire at 65.

The judges upheld the previous decision taken by the Court of Appeal that the business reasons behind the employer’s decision to retire Leslie Seldon did not constitute direct age discrimination.

The reasons Clarkson Wright and James gave for retiring Seldon were: to ensure associates had the chance to become partners after a reasonable time; to facilitate the partnership and workforce planning (with realistic expectations as to when vacancies would arise); and limiting the need to get rid of partners by way of performance management, thus contributing to the supportive culture of the firm.

Rachel Dineley, employment partner and head of the equality discrimination unit at DAC Beachcroft, said: “The long-awaited decision deserves careful consideration, not only from professional service firms and other partnerships, but all employers that need to justify any prospectively age-discriminatory practice.

“When this case first commenced, it was less significant because employers were able to rely on the so-called default retirement age (DRA), which enabled them to require employees to retire at age 65 or more. However, following the abolition of the DRA in 2011, this leading decision is important to all organisations.

“It demonstrates the tricky balancing exercise, which has to be undertaken when meeting important business needs on the one hand, while avoiding undue discrimination on the other.”

Neil Carberry, director for employment and skills policy at the Confederation of British Industry (CBI), added: “This ruling confirms that, at least in principle, employers are able to set their own retirement age. However, this does nothing to fill the vacuum left by the government’s scrapping of the default retirement age.

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“If employers want to set a retirement age that is suitable for their workforce, and know for sure whether it is legitimate, they will still have to go through a costly and lengthy legal process. The government cannot continue to pass the buck. Employers need to know how to handle the sensitive issue of retirement, with adequate protection to discuss plans with their staff, and better guidance on when a retirement age is justifiable.”

For more articles on workforce planning and retirement