RSS feedsEver since age discrimination legislation came into force in 2006, employment lawyers have been watching and waiting to see what would happen when the inevitable claims started to come before employment tribunals.
Controversially, the legislation introduced a default retirement age for employees, about which there has been much debate. However, the regulations also specifically excluded partners, which is why a recent tribunal decision which found in favour of a law firm that had compulsorily retired a partner against his wishes has created fresh uncertainty for firms and individuals within partnerships and LLPs.
The tribunal in this case took the view that the retirement clause, relied on by law firm Clarkson Wright & Jakes to force Leslie Seldon to retire on reaching 65, was discriminatory, but that it could be justified by a number of the partnership’s aims for the business.
The firm successfully argued that it needed to retire Seldon to ensure associates are given an opportunity of partnership after a reasonable period and therefore encouraged to stay with the firm. It also needed to maintain a congenial working atmosphere and so wanted to avoid confronting partners about under-performance near to their retirement.
Small comfort
These issues will be familiar to most professional partnerships which might find some comfort from the Seldon case. However, the tribunal was careful to limit its decision to this particular partnership and it cannot be assumed that the same justifications would be allowed in other cases.
This is further borne out by another case in which the Lord Chancellor lost a claim brought by a part-time Judge who was forced to retire at 65. Here, the same defence was rejected.
Partnerships looking to implement a compulsory retirement clause cannot rely on it in the event of an age discrimination claim. Given that damages in such cases are unlimited, the financial risks are high. Add to this the legal costs, the disruption to business, the potential damage to reputation and the unpleasantness of it all, this is a situation to avoid.
If you are expecting a partner to retire in accordance with an existing compulsory retirement clause, make sure you discuss the situation with them fully. They may be happy to retire, but if not, you should consider and discuss other options: can you offer a self-employed consultancy position for instance? If they wish to continue in the partnership, you should think about other ways of meeting the needs of the business: would it really be impossible to increase the size of the partnership to accommodate younger partners?
If you see no other way forward, you must be extremely confident that you can convince a tribunal that enforcing a compulsory retirement clause can be objectively justified by the aims of the business and that it is a ‘proportionate’ means of achieving these aims: a discrimination claim would be likely to succeed if it was found that there were other ways of doing so.
Seldon’s firm put forward six justifications, of which three were accepted; in Judge Hampton’s case, his employer’s defence of justification failed. It is not easy to convince a tribunal that commercial needs can be balanced against the impact of discrimination.
Open to interpretation
The legality of compulsory retirement of employees, including partners, remains open. Even before the decision in the Seldon case (leave to appeal has been granted), many legal commentators have been questioning it.
Most eagerly awaited is a case being brought by Age Concern in the European Court of Justice (known as the Heyday challenge), which argues that the Government has not objectively justified the compulsory retirement age and has failed to properly reflect the tests for justification as dictated by Europe.
Unfortunately, the ECJ is unlikely to rule until next year. Meanwhile, until we have clarity either through Seldon’s appeal or from the ECJ, professional partnerships and LLPs would be unwise to attempt to force retirement on partners, even if they appear willing. By the same token, partners who wish to work beyond 65 may struggle to do so.
Jo Davis is partner and head of employment at law firm B P Collins
