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Compulsory retirement - an age old problem

24 July 2012

Two recent Supreme Court decisions have addressed the area of compulsory retirement. It remains a legal minefield and has become more complex still since the default retirement age was scrapped.

Age discrimination – quick facts

  • Direct age discrimination is specific to age; for example an employer stating that someone is too old to do the job.
  • Indirect age discrimination occurs where there is a provision, criterion or practice that, while applying equally to all employees, puts those of a particular age at a disadvantage.
  • Age is the only type of direct discrimination where employers can seek to justify their actions.
  • Both types of discrimination can be objectively justified if the employer can demonstrate that their actions were a proportionate means of achieving a legitimate aim.

Homer v Chief Constable of West Yorkshire Police

In this case 62-year old retired police inspector Terry Homer worked as a legal advisor on the Police National Legal Database. The employer carried out a re-grading exercise. Previously, Mr Homer’s skills and experience had put him at the top of the scale but under the new system, the lack of a law degree put him into a lower grade.

At that point Mr Homer was 62 and due to retire at 65. A law degree would involve four years’ part-time study and was therefore out of the question. He considered he had been put at a disadvantage because of his age. The Supreme Court ruled Mr Homer had suffered indirect discrimination. The case meanwhile has been referred back to the employment tribunal to see if the employer’s actions can be justified.

Seldon v Clarkson, Wright & Jakes

Reports suggested that the ruling in this well-publicised case made it safer for employers to require workers to retire. This is not the whole picture.

The case was brought by Leslie Seldon, a partner in a Kent law firm, who claimed he had suffered discrimination when the firm forced him to retire at 65. The firm claimed their conduct was justified. They cited a number of ‘legitimate aims’, which were to encourage staff retention, assist in workforce planning, and preserve the dignity of older workers by avoiding the need to address issues of poor performance. Mr Seldon lost his case.

The ruling clears up some of the uncertainty that has hung around since the default retirement age was removed last year – but some questions remain.

One key point is that Mr Seldon was not an employee but a partner (and therefore self-employed). There is also the matter of the ‘legitimate aims’ that, in this case, justified the firm’s actions. These will not necessarily be present in all employment relationships.

It would certainly not be safe for employers to simply quote the same reasons relied on in the Seldon case. They would need to show genuine reasons for imposing retirement in their particular circumstances.

Even assuming an employer had persuasive reasons for obliging employees to retire at a certain age, a big question mark remains over what that age is. Whether it is 60, 65 or 70 will depend on the type of business and type of work. Either way, the Seldon case offers no help on this one.

So despite such a long-running case and high profile judgment, employers are not much better off in deciding whether or not they should have a contractual retirement age. Anyone considering the issue of retirement should bear in mind that what you are actually looking at is the end of an employment contract. Generally this will be either by way of dismissal or resignation. On that basis employers should be very wary of raising the notion of retirement with an employee who is not inclined to go quietly.

As always, if you need commercial and pragmatic employment law advice, we’re here to help so please get in touch.

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Matthew Clayton MA LLM (Cantab), CIPP/E
Partner
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Mathew Clayton
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