Seldon v Clarkson Wright and Jakes [2010] EWCA Civ 899 CA
age discrimination | justification | partnership | compulsory retirement
The Court of Appeal has held that it could be legitimate for a law firm to have a cut-off age after which partners are required to retire to avoid forcing an assessment of their drop in performance, thus maintaining a confrontation-free workplace.
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Implications for employers
- This case is important for companies involving business partnerships as, although the retirement rules that apply to employees do not apply to partnerships, partners can still claim age discrimination.
- It also says that it is a legitimate aim to have a cut-off age after which individuals are required to retire to avoid forcing an assessment of a person’s falling off in performance, thus maintaining a confrontation-free workplace. This observation may gain wider importance when the default retirement age is scrapped and employers have to justify objectively having a compulsory retirement age.
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Mr Seldon was a partner at a law firm that had a policy of retiring partners at 65. The firm required him to retire when he reached this age, in accordance with the terms of his partnership deed. He brought a claim under s.17 of the Employment Equality (Age) Regulations 2006 (SI 2006/1031), which prohibits discrimination on the ground of age against partners.
The Employment Appeal Tribunal (EAT) overturned the employment tribunal decision that this policy is justified. The EAT said that the tribunal was correct to find that ensuring that associates have the opportunity to become a partner after a reasonable period and facilitating the planning of the partnership and workforce across individual departments (later referred to by the Court of Appeal as the "dead man's shoes" aims) are legitimate aims. However, the EAT found that a third aim put forward by the employer of maintaining the friendly culture of a law firm by avoiding confrontation with underperforming partners close to retirement (subsequently referred to by the Court of Appeal as the "collegiality" aim) could not be a legitimate aim. The suggestion that partners of or around the age of 65 are more likely to underperform involves a stereotypical assumption and the law firm produced no evidence that partners of that age have particular performance difficulties.
Mr Seldon appealed on a number of grounds, including that the choice of 65 was not proportionate and that the EAT was right in condemning the assumption made in relation to the collegiality aim and was wrong not to take the same view in relation to the "dead men's shoes" aims. Mr Seldon also argued that "collegiality" could not possibly have the necessary element of public interest or social policy and the collegiality principle was applied in a discriminatory fashion because partners under 65 who were underperforming were negotiated out of the partnership.
The Court of Appeal dismissed Mr Seldon's appeal. Drawing attention to the European Court of Justice (ECJ) decision in R (on the application of the Incorporated Trustees of the National Council on Ageing (Age Concern England)) v Secretary of State for Business, Enterprise and Regulatory Reform [2009] IRLR 373 ECJ and the subsequent application of that decision to UK law in R (on the application of Age UK) v Secretary of State for Business, Innovation and Skills [2009] EWHC 2336 HC, it said that it is the UK laws that have to be justified by reference to "social and employment" aims. This does not mean that a particular employer must justify its actions by those "social and employment" aims, only that it must act consistently with the social or labour policy aims that the UK used to justify the Regulations. The legislation can, as the ECJ said, give "some discretionary powers or a degree of flexibility" to employers.
The Court of Appeal therefore found that Mr Seldon's argument in relation to the "dead men's shoes" aims clearly fails. An employer or partnership may have slightly mixed motives, but if its aim is to provide employment prospects for young people and encourage young people to seek employment by holding out good promotion prospects, that is at least consistent with social policy. It also found that the argument in relation to the "collegiality" aim fails. An aim intended to produce a happy work place has to be consistent with the social policy justification for the Regulations. It can be a legitimate aim to have a cut-off age after which individuals are required to retire to avoid forcing an assessment of a person’s falling-off in performance, thus maintaining a confrontation-free workplace.
The Court of Appeal made several other observations in relation to the justification of age discrimination:
- A directly or indirectly discriminatory measure may be justified by a legitimate aim other than that which was specified at the time when the measure was introduced.
- When considering justification of a rule such as a compulsory retirement age, that the rule has been agreed by parties of equal bargaining power (in this case, partners) is a legitimate consideration.
- The moment of time when the decision to enforce the compulsory retirement age had to be justified was at the moment of termination, with consideration being given to whether or not, firstly, the rule requiring retirement at 65 was justified and, secondly, the application of that rule was justified in Mr Seldon's case.
- The mere fact that the firm might have chosen some other age to achieve its aims cannot automatically lead to the conclusion that the rule that provides for retirement at 65 is not justified.
Additional resources
Case transcript of Seldon v Clarkson Wright and Jakes (on the BAILII website)
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