After the abolition of the default retirement age, employers have to justify objectively having a compulsory retirement age. What does this mean?

To justify a compulsory retirement age, the employer must be able to show that it is a proportionate means of achieving a legitimate aim.

"Proportionate" means that:

  • what the employer is doing is actually achieving its aim;
  • the discriminatory effect should be significantly outweighed by the importance and benefits of the legitimate aim; and
  • the employer should have no reasonable alternative to the action that it is taking.

In Seldon v Clarkson Wright & Jakes (a partnership) [2012] IRLR 590 SC, the Supreme Court summarised the case law of the European Court of Justice as identifying two different kinds of legitimate aim:

  • intergenerational fairness, for example facilitating access to employment by young people or sharing limited opportunities to work in a particular profession fairly between the generations; and
  • dignity, ie avoiding the need for divisive disputes about employees' capacity or underperformance.

The Employment Appeal Tribunal in the same case had earlier held 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 could be legitimate aims.

The aim of saving money by getting rid of older workers (who might, for example, be paid more than a younger worker for doing the same job) is not by itself a legitimate aim.

Having identified a potentially legitimate aim, the employer must also show that it is actually the aim being pursued and that it is legitimate in the particular circumstances. For example, improving access to employment for young workers would not be a legitimate aim if there was no problem in the recruitment of young workers in the particular business.

The employer also has to show that its decision to set a compulsory retirement age at the particular age, eg 65, is appropriate and necessary to achieve the identified aim.

Employers will not be able to rely on generalised assumptions that lack any factual foundation as sufficient evidence of justification. They will have to provide valid evidence if their retirement ages are challenged.