Firms can legitimately retire partners at 65 as long as the action is justified, the Court of Appeal ruled yesterday.
The ruling comes as the Government announced plans to scrap the default retirement age (DRA) as early as October 2011.
Lawyer Leslie Seldon, whose firm Clarkson Wright & Jakes (CWJ) made him retire when he reached 65, as was set out in the partnership deed, claimed that the firm could not justify the retirement and therefore acted discriminately.
Rejecting his claim, which was backed by the Equality and Human Rights Commission, Lord Justice Laws said: “My experience would tell me that it’s a justification for having a cut-off age that people will be allowed to retire with dignity.”
At the original Employment Tribunal CWJ, represented by Blackstone Chambers’ Thomas Croxford, put forward six key points as grounds for reasonable justification for Seldon’s retirement. Finding in the firm’s favour, the tribunal upheld three points of justification, suggesting that in legal terms at least they would be part of public policy.
This included the argument that the policy would allow younger associates to move through the ranks. It upheld the notion that older partners do not perform on the same level as their younger counterparts.
At the EAT, the case snowballed into a repeat performance of the age discrimination case Heyday, which examined whether the Government had misinterpreted Europe-wide Equal Treatment Framework Directive. Just days before Mr Justice Blake ruled in favour of the Secretary of State for Business, Innovation and Skills in that case, the then Labour government pledged to review the DRA (25 September 2009).
When Seldon v CWJ reached the EAT, the EHRC instructed Cloisters’ star employment silk Robin Allen QC, to act as an intervener in support of Seldon’s claim. At the CoA Allen was instructed by the EHRC to act directly for Seldon.
The Treasury Solicitor also got involved, in support of the firm, by instructing Blackstone Chambers’ Dinah Rose QC to act as an intervener for the Secretary of State for Business, Innovation and Skills.
The firm instructed Blackstone Chambers’ Thomas Croxford to defend the claim.
The EAT ruled in favour of the firm on all points save one, namely that the assumption that performance dropped off at 65 was not supported by any evidence and involved stereotyping.
This was appealed again to the CoA, but the action was stayed in July 2009 to allow the Heyday case to be heard. The CoA was reconvened earlier this month.
The CoA held that the Tribunal had been right to find that the firm could justify the retirement because it enabled associates to move up the ranks to partnership; it facilitated the planning of the partnership and gave the workforce long-term expectations on when vacancies would arise; and it limited the need for partners to be expelled by way of performance management, thus contributing to the congenial and supportive culture of the firm.
Beachcroft employment partner Rachel Dineley commented: “As the case makes clear, you may only lawfully discriminate against partners on grounds of age if you can justify it – that is to say that you have a legitimate aim and that you use a proportionate means of achieving the aim or aims.
“This is a general principle that underlies the rules as a whole, although there are some exceptions for particular types of treatment in respect of employees, for example in the provision of benefits and in relation to retirement.
“This judgment clearly also holds useful lessons for employers who may have to objectively justify retiring employees in the foreseeable future.”