The Supreme Court today handed down its long-awaited judgment on age discrimination in partnerships and LLPs with retirement ages in the case of Seldon v Clarkson Wright and Jakes. Mr Seldon’s appeal in respect of his compulsory retirement was unanimously dismissed.
Set out below are five key points to note:
- A retirement age is discriminatory. Age discrimination is only permitted where that discrimination is a proportionate means of achieving a legitimate aim.
- It was confirmed that (i) staff retention and workforce planning (‘dead men’s shoes’) and (ii) limiting the need to expel partners by way of performance management (‘collegiality’) were both legitimate aims.
- Although the Court confirmed that firms may be pursuing legitimate aims in specifying a retirement age, it did not identify a particular age at which a firm can be sure it can retire partners without risk. There is still a great deal of uncertainty as to what retirement age can be justified.
- The court held that it will be a factor in this case that, at the time Mr Seldon retired, there was a default retirement age of 65 for employees. This rule has since been abolished, which suggests it will be much harder to justify a particular retirement age.
- Although this decision provides some comfort to firms with a retirement age, the reasons for having that retirement age remain critical, as is the need to document those reasons.
The question is no longer ‘can a compulsory retirement age be justified’, but rather ‘at what age can a compulsory retirement age be justified’. This case has moved on the debate, but is not the magic bullet firms with retirement ages had hoped for.
If you would like advice or support in connection with this issue, please contact Tina Williams (email@example.com), Doug Preece (firstname.lastname@example.org) or Daniel Sutherland (email@example.com).