By Jo Davis
The Govt is at cross-purposes over forced retirement
9 August 2010
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The age discrimination regulations came into force in October 2006, but contained a significant carve-out, the default retirement age (DRA), which allows employers to dismiss employees when they hit 65.
The DRA was contentious from the off. Age Concern challenged it all the way to the European Court of Justice and back (known colloquially as the Heyday challenge). However, the Government won through, managing to justify it on the basis that it “maintains confidence in the labour market”.
Having won that battle, however, it is now conceding the war. On 29 July the Government announced its intention to phase out the DRA. In its consultation document the Government states that it is “committed to ensuring that older workers, who want to get ahead in their careers, develop new skills and start new businesses, have the freedom to do so”.
In removing the DRA the Government is seeking to ensure “that people are not deprived of the opportunity to work simply because they have reached a particular age”.
But will it work?
In tandem with Heyday, Leslie Seldon has been challenging his own forced retirement from Clarkson Wright & Jakes (CWA). The DRA doesn’t apply to Seldon as a partner, but the firm has defended the proceedings on the basis that his retirement was a proportionate means of achieving a legitimate aim (or, to put it more simply, justified).
The case went to the Court of Appeal (CoA) at the end of June and the Government was forced to intervene, putting forward arguments aligned with those it relied on in Heyday.
The CoA’s judgment in Seldon v CWJ was handed down on 28 July, the day before the Government’s DRA announcement, and arguably undermines the Government rhetoric. If so, it is all the more embarrassing for the Government as the CoA has adopted the Government’s stance in lowering the justification bar.
In the lead judgment, Sir Mark Waller stated that if an employer or partnership has a retirement age to provide ”employment prospects for young people, and encourage young people to seek employment by holding out good promotion prospects”, or to produce “a happy workplace” that is a legitimate aim.
As to the age chosen for retirement (the ’proportionate means’ part of the test), although there was no evidence provided as to whether another age could have achieved the firm’s aims, that was not a problem, as the firm had to pick an age and (to paraphrase, for which I apologise to Waller) 65 was as good as any.
So where does this leave us? On the one hand the Government is committed to ensuring that people are not forced out of employment simply because they have reached a particular age; on the other, the CoA has endorsed a justification defence that can be adopted by most businesses.
Indeed, if the Seldon judgment stands, it would seem that it will be a rare case that a business will not be able to justify its retirement clause, which will be a relief to many employers. In reality, they will still be able to retire staff, unless perhaps there is a dearth of staff wanting to do that job, in which case employers are unlikely to force someone to retire in the first place.
However, the security that the Government wishes to provide will elude many, and particularly anyone holding a managerial post at retirement age, which are the very employees it wants to retain
in the labour market.
Perhaps it goes to show that you really cannot please all of the people all of the time and, in trying to do so, you may end up making a hash of it.
Jo Davis, leader, employment practice group, BP Collins