We asked Majella McGuinness, solicitor, of PricewaterhouseCoopers Legal LLP to examine the recent case of Seldon v Clarkson Wright and Jakes.

Since 1 October 2011, your business hasn’t been able to rely on a national default retirement age to dismiss employees when they reach the age 65. You’re only able to legally retire employees at 65 (or any other age) if there’s a clear, objective justification for the use of a contractual retirement age. The Supreme Court's decision in Seldon provides businesses with some guidance around when a contractual retirement age is acceptable.

On 25 April 2012, the Supreme Court handed down its judgment in the case of Seldon v Clarkson Wright & Jakes (a partnership) regarding a contractual retirement age of 65 for partners in a law firm. The Supreme Court confirmed the Court of Appeal's previous judgment that the partnership was able to objectively justify the use of a contractual retirement age for its partners on the grounds that it was a proportionate means of achieving certain legitimate aims.

The following aims were held to be legitimate:

* It helped facilitate the planning of the partnership’s recruitment and resourcing, as partners and employees had a realistic long-term expectation as to when a vacancy would arise;

* It ensured that associates within the partnership were given the chance to become partner within a reasonable timescale; and

* It limited the need to expel partners by way of performance management, which would help to create a more friendly and supportive culture within the firm.

These aims were held to be consistent with broader public policy objectives including the social policy aim of sharing out professional employment opportunities fairly between the generations and the "dignity" aim of avoiding the need to dismiss older workers on grounds of incapacity or poor performance.

The decision means that businesses can have their own contractual retirement age if they can show that it is a proportionate means of achieving certain legitimate aims and that those aims satisfy public policy objectives as well as the business's particular internal objectives. However, the Judgment states clearly that "all businesses will now have to give careful consideration to what, if any mandatory, retirement rules can be justified".

If your business continues to operate a contractual retirement age, you will need to consider the reasons for retaining a retirement age and whether you can show that having a contractual retirement age meets specific legitimate aims which are relevant to your business' particular circumstances.

Unfortunately, the judgment leaves open the big question of whether 60, 65, 70 or any other age would be a justifiable retirement age. The Court did not provide any guidance as to what the contractual retirement should be and instead, remitted back to the Tribunal the question of whether the mandatory retirement age of 65 was a proportionate means of achieving the legitimate aims. Uncertainty therefore remains as to what age a business can lawfully identify as being its contractual retirement age. Accordingly, specialist employment law input should be obtained when confirming your policy approach.

Full Case Decision:
http://bit.ly/IbhmEa