What today’s Supreme Court decision on age discrimination means for employers

Today the Supreme Court handed down the much awaited decision on the Seldon age discrimination case. Here legal expert, Ronnie Fox from Fox lawyers explains what it means from an employer’s point of view

A couple of years ago the in-house counsel of a major corporate client asked me to advise whether a standard retirement age of 65 would be in breach of the age discrimination legislation. Then he said, “I don’t want you to say that justification depends on whether the policy is “a proportionate means of achieving a legitimate aim”; that doesn’t help me”. He wanted a definitive answer.

It is tragic that Seldon (and Homer too) have been all the way up to the Supreme Court only for the decisions as to whether the particular circumstances in those two cases can indeed be justified to be remitted back to the Employment Tribunal. The Employment Tribunal will have to decide whether on the specific facts a mandatory retirement age of 65 was a proportionate means of achieving a legitimate aim. Employers will just have to wait and see what the tribunal decides. How much simpler it was when the law permitted a default retirement age! The need for a further hearing in Seldon will probably come as a tremendous disappointment to the parties. Today’s decision will not make it easy to give clear advice to clients as to what retirement age is acceptable.

On the positive side, the Supreme Court has given some guidance. In future it will be harder for employees and partners who are required to retire at a compulsory retirement age to argue that they have been discriminated against if the reasons behind the compulsory retirement policy have been well thought out, carefully explained and alternative ages considered. The Supreme Court seemed to accept that the reasons given for the policy at Clarkson Wright and Jakes, (namely, (i) giving associates an opportunity of partnership within a reasonable time, and thereby an incentive to remain with the firm; (ii) facilitating workforce planning by knowing when vacancies were to be expected; (iii) limiting the need to expel underperforming partners, thus contributing to a congenial and supportive culture within the firm) were all potentially consistent with the social policy objectives in the Council Directive.

So we shall have to wait to see what happens. What is clear is that abolishing the default retirement age has not been the end of the discussion and has introduced all sorts of uncertianty for businesses.  It will remain to be seen whether this lack of clarity will mean more or less jobs for older workers.