When I’m 65…

The government’s July consultation document is called Phasing out the Default Retirement Age. Speedy abolition would be a more accurate description, since the paper suggests next April as the start date for ending the current regime. Transitional protection would be available only for retirements notified prior to April 2011 and taking effect before October next year, provided at least six months’ prior notice has been given.

The “right to request” procedures would also be abolished. These procedures, which give employees the right to advanced notification of forced retirement and to ask to continue working, are seen as complex and costly to operate. However, the government thinks they might have the benefit of encouraging dialogue about retirement plans which would not otherwise happen. It therefore suggests that they could be replaced with a code of practice or guidance on how to conduct retirement discussions. The government is also considering other provisions which might make it easier for employers to keep older workers in employment.

If the government’s plans go ahead dismissals at all ages will be governed by the standard unfair dismissal rules. That will leave employers with a choice if they wish to dismiss older workers. The safest option—which is what organisations such as Age Concern have been calling for all along—is to stop using compulsory retirement as a reason for dismissal. If they want to dismiss, they will have to rely on the same potentially fair reasons, such as capability, conduct or redundancy that apply to the rest of the workforce. The other alternative would be to retain a compulsory retirement age and rely on the general justification defence for direct age discrimination, currently set out in reg 3 of the Employment Equality (Age) Regulations 2006 (SI 2006/1031). A dismissal because an employee had reached a justified retirement age would not infringe the Regulations, and would presumably also qualify as a potentially fair reason for dismissal (“some other substantial reason”).

According to the consultation document, which draws on research commissioned by the outgoing Labour government, around 30% of employers still have a compulsory retirement age, although a large majority of these accept all requests from employees asking to stay on beyond that age. That still leaves a sizeable minority of employers who enforce a retirement age and will want to consider whether they can continue to do so.

Seldon’s quest

Coincidentally (or perhaps this is an example of inspired timing on the part of the government) a Court of Appeal judgment on this very point was handed down the day before the consultation was launched. Seldon v Clarkson Wright and Jakes [2010] EWCA Civ 899, marks the latest stage in a long battle by Leslie Seldon to overturn his former partners’ decision to make him retire at the age of 65. The default retirement exemption does not cover retirements from partnerships. So the firm had to demonstrate that retiring Mr Seldon, although less favourable treatment on grounds of his age, was a “proportionate means of achieving a legitimate aim”. After two appeals the legitimacy of the partnership’s main aims in setting a compulsory retirement age have been endorsed by the Court of Appeal, but the employment tribunal has still to decide if the means chosen were proportionate.

This decision contains valuable pointers about how the courts will approach similar questions involving employees if the government’s plans go ahead. At first sight the signs are promising for employers hoping to retain a compulsory retirement age. The Court of Appeal was prepared to accept that succession planning and allowing older workers to retire “with dignity” were both legitimate aims. It dismissed arguments that the decision of the European Court of Justice in the Age Concern case last year (C-388/07) meant that only public policy aims could be used to justify direct age discrimination.

The way is therefore open for employers to rely on the legitimate aims of their own business to justify compulsory retirement, providing that the means chosen to achieve them are proportionate. The decision is less helpful about which age to pick, because, although not deciding the point, it appears to assume that choosing the age of 65 would at least in part be justifiable because that was the age from which the retirement exemption for employees applied. Looking at things more generally, it is possible that 65 will prove too young. According to the consultation document, there is little evidence of a decline in performance prior to 70, based on age. Even in the world of sport, where there is plenty of scientific evidence about the effect of age on performance, the position is not always clear-cut. In Martin v Professional Game Match Officials Ltd ET 2802438/2009 the employers failed to justify a retirement age of 48 for assistant referees, a relatively advanced age for top-level sport, at least from the perspective of many football fans.

Charles Pigott, professional support lawyer, Mills & Reeve LLP.
E-mail: Charles.Pigott@Mills-Reeve.com

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