Compulsory retirement at 65 must be justified, says EAT

A case awaits judgment from the European Court of Justice on whether employees can be forced to retire at 65.

The EAT said that law firm Clarkson Wright and Jakes (CWJ) was not entitled to force one of its partners, a Mr L J Seldon, to retire at 65 just because of a general assumption that people's performance deteriorated at that age.

The EAT accepted CWJ's argument that it had a retirement age to avoid undermining the collegiate atmosphere of the firm by resorting to specific performance measures to oust partners. It said, though, that it had not shown that that age should be 65.

"The collegiality objective does justify the adoption of a compulsory retirement rule, but … the Tribunal was not entitled to form the view that this objective itself justified fixing that age at 65," said the EAT's ruling.

The EAT supported two other reasons used by CWJ to force Seldon's retirement. Those were that the firm had to have a definite retiring age so that it could plan properly for the future and so that it could offer more junior lawyers the realistic prospect of promotion to partner.

The EAT has asked the Employment Tribunal to reconsider the case solely on those grounds.

"The Tribunal was entitled to conclude that the other two objectives were legitimate," it said. "We cannot be sure what decision the Tribunal would have reached had it assessed the question of justification by reference to these two objectives alone. Accordingly the case must be remitted to the Tribunal to consider the question afresh."

Though the EAT accepted that a compulsory retirement age was a legitimate way for the business to operate in order to manage its business properly, it said that the choice of 65 in this case was not justified.

"The assumption underlying the rule is that as partners reach the age of 65 so there is a significantly greater risk that they will under perform," said the ruling. "That, says [Seldon], is an unjustified and discriminatory assumption. The partnership produced no evidence that partners of or around that age did have particular difficulties with under performance."

"We are satisfied that the appellant is right to say that there has been a stereotyped assumption that partners will by the age of 65 be more likely to be under performing than partners of a younger age," it said. "The Tribunal's assessment was based on the assertion that this was a reasonable assumption. With respect to the Tribunal, we think that reasoning of that kind is what the legislation is seeking to avoid."

Mr Justice Elias, the President of the EAT, said in his ruling that the Tribunal should not have allowed the assertion about the performance of over-65s to be the basis of the decision.

"It is not self-evident that performance will dip in that way at that age, and there was no evidence to support that proposition before the Tribunal," the ruling said. "It follows that, in our view, this particular legitimate aim relied upon, namely to promote collegiality between partners, could not justify the rule."

The EAT said that choosing an age could be acceptable, but it would need to be a reasoned choice.

"In such a case the partnership needs to analyse very carefully the age at which performance falls off," said the ruling. "That does not necessarily mean that there have to be specific examples of underperforming partners. That will be impossible in, say, a new firm starting out. It would, however, require evidence of a considered and reasoned explanation as to why the particular age had been chosen. Mere assertion would not be enough."

Employment law specialist Ben Doherty of Pinsent Masons, the law firm behind OUT-LAW.COM, said that the case should be a reminder to firms that decision based on assumptions can be challenged under discrimination laws.

"The fact that this matter has been referred back to the tribunal does not necessarily mean that a different decision will be reached," said Doherty. "However, the fact that the EAT were not prepared to accept that there is a general presumption that performance tails of at 65 is a timely reminder to all employers about the risks of making stereotypical assumptions about employees be it because of age or any other factor."