Samantha Mangwana, partner, Russell Jones & Walker
Opinion: Compulsory retirement cases remain each to their own
5 September 2011
Compulsory retirement - is it lawful? This is a particularly thorny question for lawyers reaching compulsory retirement age, as well as for the law firms they work for. The stakes should not be underestimated. Get it wrong and it could potentially lead to a massive age discrimination claim.
While in other types of dispute lawyers are often as reputationally risk averse as their firms, when it comes to age discrimination dismissals it is a different story. With compensation representing potential career loss of earnings, an unwillingly retired partner may feel they have nothing left to lose but everything to gain.
Although the national default retirement age of 65 has been abolished, the position going forward remains uncertain. This is because, while dismissing someone at a given age is clearly discriminatory, it can still be lawful if it is “objectively justified” under the UK Equality Act and the European directive our laws derive from.
In its ruling in Fuchs v Land Hessen (2011), the Court of Justice of the EU helped provide some clarification. While not definitive, the ruling sets out factors relevant to assessing individual cases.
The long-running case of Seldon v Clarkson Wright & Jakes is due to come before the Supreme Court in January, when the Fuchs ruling will be interpreted and applied to the circumstances of a law firm partner retired compulsorily at 65.
Objective justification is a two-stage test. The measure needs to have a legitimate aim and be proportionate to that aim, meaning not going beyond what is appropriate
and necessary to achieve that. National authorities have to find the right balance in each case. The most controversial aspect of the Court of Appeal’s judgment in Seldon was the idea that it was a legitimate aim to use retirement to spare failing partners the indignity of expulsion for performance management, which contributed to a congenial and supportive culture at a law firm.
Able, intelligent, older lawyers who want to continue working will hope that the Supreme Court will seize the opportunity to dispel the notion that there is a strong link between someone’s age and their ability to do a job. This was, after all, just the type of stereotypical myth that the legislation was brought in to combat.
In Fuchs the court did consider that avoiding capability disputes could be relevant, finding that “to encourage the recruitment and promotion of young people, to improve personnel management and thereby to prevent possible disputes concerning employees’ fitness to work beyond a certain age, while at the same time seeking to provide a high-quality justice service, can constitute a legitimate aim”.
That, of course, is only the first step. National courts must scrutinise the particular circumstances carefully to assess justification in each case.
And the circumstances were certainly very particular in Fuchs. It concerned state prosecutors in Germany, who are required to retire at 65. Despite that requirement, it is possible for holders of the post to gain an extension to age 68 and then take on another related post with no age limit. More pertinently, state prosecutors were then able to retire on a very generous pension equal to 72 per cent of full salary.
Those factors will apply very rarely in private practice, particularly in relation to partners’ pension arrangements, which in most cases are nonexistent.
Seldon also may not provide a complete answer, since what is relevant to objective justification for a small firm in Kent will not necessarily apply to magic circle, national or boutique firms. Older partners and lawyers concerned about compulsory retirement are best advised to tot up the likely losses and assess critically the justifications on the actual specific circumstances, since it seems we will be looking at these on a case-by-case basis.