A lawyer forced to retire at 65 lost a Supreme Court Appeal on age discrimination today.
Leslie Seldon, a partner in a Kent firm, claimed he had been treated unfairly when compulsorily retired at 65.
He appealed to the UK's highest court after losing a fight with Clarkson Wright & Jakes, which is based in Orpington, in the Court of Appeal.
His case concerned the scope for justifying direct discrimination on the ground of age, and in particular a mandatory retirement age contained within a partnership agreement.
But today five Supreme Court justices unanimously dismissed his appeal.
However, they remitted his case back to the Employment Tribunal "to consider whether the choice of a mandatory age of 65 was a proportionate means of achieving the legitimate aims of the partnership".
After the ruling, Clive Howard, partner in the employment team at law firm Russell Jones & Walker, said: "The Supreme Court decision in Seldon is disappointing given the recent abolition of the forced retirement of employees, since it upheld that a partner at a law firm could, in principle, be forced to retire at a given age.
"This would appear to undermine the Government's decision to abolish retirement ages in the first place.
"However, employers should not form the view that this means it will be lawful to force staff to retire at 65 up and down the country.
"There were specific factors which applied to this small law firm in Kent, which will not be relevant to every organisation.
"The Supreme Court has asked the Employment Tribunal to consider whether the retirement age of 65 was justified on the facts of this case."
Richard Fox, partner and head of employment at law firm Kingsley Napley, said after the ruling: "This is a significant decision, not just for partnerships but all companies craving certainty and guidance about how to handle issues of retirement and succession.
"The abolition of the default retirement age and increasing numbers of people wanting to work longer to make up for inadequate pension provision, combined with economic pressure on jobs, is a real conundrum for employers.
"In that sense the guidance offered by the Supreme Court today that it is possible to justify compulsory retirement on specific grounds is very much to be welcomed."
The Supreme Court judges also gave a ruling in another age discrimination case, which had been heard alongside that of Mr Seldon's, involving a claim by Terence Homer, who joined the Police National Legal Database (PNLD) as a legal adviser in 1995 at the age of 51.
Following a review in 2005, the PNLD established a new career structure with three thresholds.
In order to be eligible for the highest pay grade, legal advisers were required to hold a law degree.
Mr Homer was refused entry into the highest pay grade on the basis he did not hold a law degree.
He complained to the Employment Tribunal that he had been treated less favourably on the ground of his age, on the ground that, being 61, he would not be able to obtain a law degree before he was likely to retire, unlike younger employees.
The Supreme Court justices unanimously allowed Mr Homer's appeal, finding that he was "indirectly discriminated against" by West Yorkshire Police.
Lord Hope, Lady Hale, Lord Brown, Lord Mance and Lord Kerr, remitted his case to the Employment Tribunal to "reconsider the issue of justification".
Both of the cases before the Supreme Court involved an interpretation of a rule that allows employers to justify age discrimination if they can prove it is a "proportionate means of achieving a legitimate aim".
Commenting on the decisions announced today, the Equality and Human Rights Commission (EHRC), which brought the case on Mr Seldon's behalf and partly funded the case of Homer, said it believed the judgments "will remind all employers of their responsibilities and help make the law clearer".
It said in a statement: "Age discrimination is unlawful in the workplace, but the law allows exceptions to that general rule only if it can be justified.
"The justification is if it is a 'proportionate means of achieving a legitimate aim'. This test can be confusing for employers and employees."
John Wadham, the commission's general counsel, said: "The judgments remind employers that a worker's age is not shorthand for their competence and should never be used in that way.
"An employee's ability to do a job should not be based on out of date assumptions about what people can do as they get older.
"Every employer must think carefully about whether it really needs to have a policy that directly or indirectly discriminates against people based on their age.
"The court has made it clear that such policies must be justified on a case-by-case basis.
"An employer or partnership must be sure that the same aim couldn't be achieved using a less discriminatory approach."
In the case of Mr Seldon, who joined the Kent firm in 1971 and was made an equity partner in 1972, there was no issue that the application of a mandatory retirement age constituted direct age discrimination - the case concerned "how it might be justified".
In 2005 Mr Seldon and the other partners in the firm agreed and adopted a partnership deed which provided that, subject to the partners' agreement to the contrary, partners who attained the age of 65 had to retire from the firm by the end of the following December.
Mr Seldon reached 65 in January 2006. Realising he would need to continue beyond that point for financial reasons he asked the other partners to extend his tenure, but was rejected on the basis there was no sufficient business need.
In today's ruling Lady Hale said the Seldon case raised "difficult issues about the scope for justifying direct discrimination on the ground of age and in particular a mandatory contractual retirement age".
Mr Seldon alleged that his expulsion from the firm was an act of direct age discrimination, but the firm claimed his treatment was justified, putting forward a number of "legitimate aims" regarding its business.
Lady Hale said she accepted that the "identified aims" were "legitimate".
She said: "It was made clear that the firm was not relying on the personal characteristics or any poor performance of Mr Seldon, nor were they relying on the structure of the wider market for legal services, but simply upon their own circumstances."
Giving general comments she said that "once an aim has been identified, it has still to be asked whether it is legitimate in the particular circumstances of the employment concerned".
Lady Hale said the "means chosen have to be both appropriate and necessary".
She said: "It is one thing to say that the aim is to achieve a balanced and diverse workforce. It is another thing to say that a mandatory retirement age of 65 is both appropriate and necessary to achieving this end.
"It is one thing to say that the aim is to avoid the need for performance management procedures. It is another to say that a mandatory retirement age of 65 is appropriate and necessary to achieving this end."
She pointed out: "The means have to be carefully scrutinised in the context of the particular business concerned in order to see whether they do meet the objective and there are not other, less discriminatory, measures which would do so."
One of the issues looked at by the judges was whether a measure has to be justified, not only in general, but also in its application to a particular individual.
It was argued on Mr Seldon's behalf that the partnership should have to show, not only that a mandatory retirement rule was a proportionate means of achieving a legitimate aim, but also that applying it to him could be justified at the time.
Lady Hale ruled that there was a distinction between justifying the application of the rule to a particular individual, "which in many cases would negate the purpose of having a rule", and justifying the rule in the particular circumstances of the business.
She added: "All business will now have to give careful consideration to what, if any, mandatory retirement rules can be justified."
Mr Seldon's case is to go back to the employment tribunal "on the basis that it had not been shown that the choice of 65" was an appropriate means of achieving the company's aim of limiting the need to expel partners by way of performance management.
Lady Hale, ruling in the Homer case, said: "It was not long ago that it was taken for granted that age was a relevant criterion in deciding how long people should should be allowed to go on working. Now that has to be justified.
"The same is true of apparently neutral criteria which have an adverse impact upon people of a particular age.
"But both the Age Regulations and the Equality Act recognise that difficult balances have to be struck between the competing interests of different age groups.
"We all have a lot of learning to do."
Commenting on the ruling, Michelle Mitchell, charity director- general of Age UK, said: "This is a wake-up call to employers that age discrimination in the workplace is no longer legally acceptable and that negative ageist stereotypes are out of date.
"This judgment makes it clear it will be very difficult to justify forced retirement on grounds of age alone.
"We are delighted that the Supreme Court has recognised the important contribution of older workers and has sent this message to the UK Government and business."
Tom Flanagan, head of employment at Irwin Mitchell, the law firm which advised Age UK, said: "Employers are already being encouraged to apply more rigorous performance management processes to older employees so that a dismissal at 'a certain age' might be viewed as justified for poor performance, not age.
"I would not be surprised to see a large increase in age discrimination cases, at least for two or three years, until employers can show, if they can, that the 'new' performance management processes are applied evenly across the whole workforce."
- More about:
- Supreme Court