A recent Supreme Court ruling found that an employer was justified in forcing the retirement of a senior employee because it was in the "public interest." This means that companies could potentially dismiss older workers to make way for younger staff. However, employers will be taking a significant risk in setting their own mandatory retirement age, and should investigate alternative approaches.
At a time of shrinking pensions, and with the number of people reaching pensionable age in the UK set to increase by 4.9 million between 2010 and 2020, a recent Supreme Court ruling suggests that employers may be able to impose a mandatory retirement age despite the abolition of the default retirement age in 2011.
The Supreme Court case in question involved Leslie Seldon, a partner with the law firm Clarkson Wright & Jakes (CWJ), who argued that he experienced direct age discrimination when CWJ compelled him to retire. The court found that CWJ was within its rights to retire Mr Seldon because the reasons behind the decision illustrated that it was in the "public interest," and achieving a balanced and diverse workforce is a justifiable aim.
The reasons that CWJ gave for its decision to retire Mr Seldon included giving associates the chance to become partners after a reasonable period of time, facilitating planning, and limiting the need to restrict the number of partners through performance management. However, the court was unable to rule on whether a retirement age of 65 is appropriate and necessary in achieving the employer's goals, and so the case is going back to tribunal.
Employers should not assume that the case means that they can impose a retirement age on the justification that it is for the public good. This would be a risky strategy, with firms possibly leaving themselves open to legal action. Many of the specifics of the case are only relevant to the parties involved, and more general points will be argued out in test cases. It will be very difficult in practice to explain why a particular retirement age has been chosen, and to prove that younger staff will be promoted and hired as a result. A less risky way of managing an aging workforce until the law is clarified further would be to improve workplace planning and implement performance management at all levels of the organization.
For further details please contact Jane Batchelor at email@example.com.