The default retirement age was abolished in 2011, and since 2006, under the Employment Equality (Age) Regulations 2006 it has been illegal to discriminate against employees on the grounds of age. The Regulations do not apply to partnerships. However, age does not attract the absolute protection against discrimination which race, religion, or sexual orientation do.
It is common practice for partnerships to agree that partners have to retire at the age of 60 or 65, but is it justifiable to treat people differently because of age and to enforce retirement at particular ages.
It had been hoped that the Supreme Court would provide partnerships, and other employers, with some certainty on the issue when the Judgment in Seldon v Clarkson, Wright and Jakes (A Partnership)  UKSC 16 was handed down earlier this year. To some extent it helps, but it does not give definitive guidance to all partnerships and employers in all circumstances.
The Equality Act 2010, which replaced the Employment Equality (Age) Regulations 2006, makes it unlawful to discriminate against employees, workers, job applicants and trainees, directly or in directly, because of their age. Direct discrimination occurs where, because of age, one person is treated less favourably than another in a comparable situation. Indirect discrimination occurs where one person applies a provision, criterion or practice (PCP) to all employees, workers and job applicants equally, but which puts or would put those of a particular age or age group at a disadvantage when compared with others and the employer cannot justify the PCP by showing it to be a proportionate means of achieving a legitimate aim.
Both direct and indirect discrimination can be justified if there is a proportionate means of achieving a legitimate aim.
In Mr Seldon’s case there was no dispute that the requirement for him to retire at 65 was direct discrimination. The question for the Court was whether this treatment could be objectively justified.
Two different types of legitimate objectives have been identified by the European Court of Justice. These are:
1. Intergenerational fairness; and
2. Dignity (i.e. avoiding the need to dismiss old workers on the grounds of incapacity or underperformance).
The Supreme Court recognised that the United Kingdom had chosen to give partnerships and employers the flexibility to choose which objectives to pursue, provided that there objectives could count as legitimate objectives of a public interest nature, and were consistent with the social policy aims of the state. The objectives also had to be achieved by a proportionate means.
The Court decided that three of the aims of Clarkson, Wright and Jakes were legitimate. The first two, which were staff retention and workforce planning, were in accordance of the objective of intergenerational fairness. The third objective of limiting the need to expel partners by way of performance management was in accordance with the “dignity” objective.
The Court dismissed Mr Seldon’s appeal, deciding that compulsory retirement was capable of justification as Clarkson, Wright and Jakes had relied upon legitimate social policy aims. However, as proportionality was not addressed, this case has been remitted back to the employment tribunal for consideration as to whether the firm’s retirement age of 65 was a proportionate means of achieving the aims identified.
Whilst this case has provided some clarity for employers, there are still no definitive answers which can be applied to every case.
It is therefore necessary when deciding upon any compulsory retirement provisions in a Partnership Agreement and implementing them, to ensure that a legitimate aim is being pursued. Every partnership will be different and will have different aims and objectives. Circumstances will also be different. As the Court pointed out, improving the recruitment of young people in order to achieve a balanced and diverse workforce is, in principle, a legitimate aim. However, if there is no problem in recruiting the young, then it may not be a legitimate aim for the business concerned. Likewise, avoiding the need for performance management may be a legitimate aim, but if the business already has sophisticated performance management measures in place, it may not be a legitimate aim to avoid them for only one section of the workforce.
Partnerships and businesses need to carefully consider their aims and objectives when deciding whether or not to incorporate a compulsory retirement age into their agreements and contracts of employment. They also need to give similar consideration to their aims and objectives when implementing such provisions. It will be necessary to ensure that a legitimate aim is in fact being pursued; whether it is legitimate in the particular circumstances, and the means chosen to implement it are both appropriate and necessary.
It is not necessary that the aim should have been established at the time when the measure was first adopted. There can, therefore, be retrospective rationalisation of a decision. This may be particularly relevant where a Partnership Agreement contains compulsory retirement provisions, which have been in place for some considerable time.