Partner loses age discrimination claim, UK to end default retirement age

A former partner forced to leave his UK law firm at 65 has lost his appeal that the partnership terms constituted unlawful age discrimination.

The decision was made the day before the government committed itself to abolishing the default retirement age (DRA) of 65 by 1 October 2011.

The age regulations, which implement the EU’s equal treatment directive 2000/78, ban age discrimination unless there are justifications based on legitimate aims.

Leslie Seldon, former senior partner at Clarkson Wright and Jakes, in Kent, UK, argued in the employment tribunal that partnership rules at his old firm failed the ‘legitimate aims’ test.

The tribunal, and later the Employment Appeal Tribunal, accepted the firm’s defence that the rules ensured that associates were given the opportunity of partnership after a reasonable period and helped manage the development of the partnership.

Upholding the findings, 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 that “people will be allowed to retire with dignity”.

“To have such a policy requires a cut-off age which some when they reach it will think too low but it does not follow that it is not justified to have a cut off age,” he said.

The ruling comes after the High Court’s decision in the Heyday case, which validated the argument 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”.

The Court of Appeal rejected Leslie 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.

Sir Mark upheld a further “collegiality” argument that forced retirement meant firms did not have to manage ageing partners out of the partnership on ground of performance, “therefore contributing to the congenial and supportive culture in the firm”.

“It seems to me that an aim intended to produce a happy work place has to be within or consistent with the government’s social policy justification for the regulations. It is not just within partnerships that it may be thought better to have a cut-off age rather than force an assessment of a person’s falling off in performance as they get older,” he said.

Following rulings in cases such as Heyday and Palacios de la Villa, the Court of Appeal decision in Seldon suggests that there is broad scope for justification of a mandatory retirement age.

“The aim being fulfilled can be any legitimate aim and not merely the specific social policy aims mentioned in the EU directive,” according to Sue Ashtiany, of special counsel at Nabarros.

“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.

Meanwhile, employment relations minister Edward Davey has launched a consultation on the Employment Equality (Age) Regulations, which introduced the existing system in 2006, with transitional arrangements expected to begin in April 2011.

“With more and more people wanting to extend their working lives we should not stop them just because they have reached a particular age,” he said. “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.”

A spokesman for the Department of Business Innovation and Skills said: “In removing the DRA, the government intends also 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.

“Given the intention of phasing out the DRA, the government believes there would be little justification for retaining this administrative burden on employers and that the existing legal framework is sufficient for both employers and employees.”

The closing date for sending in responses to the consultation on the age regulations is 21 October 2010.

See ‘Partner protection’ for an analysis of the US position on age and gender discrimination against partners.