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Home > Regulation > UK Regulation

Forced retirement can be justified

Employers need to show they have valid reasons for imposing a mandatory retirement age

By Yvonne Gallagher | Published May 23, 2012 | comments

Following the decision of the supreme court in the much publicised Seldon case, employers could be forgiven for feeling a level of confusion about their ability to maintain or use compulsory retirement ages and more generally to manage succession planning in their workforce.

Mr Seldon had been a partner in a law firm (and so was not an employee) and he challenged, as unlawful age discrimination, the requirement in the partnership agreement that all partners should retire at age 65.

He argued either that there should be no retirement age or that it should be greater than age 65. Until October of last year, employers, unlike partnerships, were protected against age discrimination and unfair dismissal claims arising out of compulsory retirement provided that they followed a detailed statutory procedure. Following the removal of that procedure, however, the scope for challenge is much greater and the Seldon case is therefore relevant to all employers as it provides a detailed review of the circumstances in which a compulsory retirement age might be capable of justification. The judgment provides a very clear summary of the development of the law to date, but unfortunately there is little in the way of certainty for employers going forward.

Age discrimination, unlike other forms of unlawful discrimination can be justified whether the discrimination is direct or indirect. If an employer can show that its reason for a policy which apparently subjects some people to a detriment due to their age (in this case use of a mandatory retirement age) is a proportionate means of achieving a legitimate aim, then a claim of unlawful discrimination brought by the aggrieved individual can be successfully defended. This defence is expressly provided by the European Union directive on which the UK age discrimination legislation is based. The supreme court was required to consider what could amount to legitimate action for this purpose.

The supreme court held that it is indeed possible to justify the use of a compulsory retirement age, and this could be done by reference both to the aims of “inter-generational fairness” (which broadly includes the need to allow promotion prospects for younger workers by requiring older workers to cease working) and “dignity”, as mandatory retirement may allow employers to avoid what is described as humiliating performance management processes in relation to older workers whose performance has begun to decline. So far so good for employers it would appear, but the reality is that while Mr Seldon lost his appeals, a fact which was widely noted, the case does nothing to make life easy for employers and indeed suggests strongly that it will be very difficult in practice for employers to justify the use of a specified retirement age.

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