Discrimination - Discrimination on the grounds of age - Employee partner in defendant solicitors’ firm

Seldon v Clarkson Wright and Jakes: SC (Justices of the Supreme Court Lords Hope (deputy president), Brown, Mance, Kerr, Lady Hale): 25 April 2012

In 1971, the employee joined the defendant law firm. He became an equity partner in 1972.

The firm’s partners agreement stated that partners would retire at the age of 65. The employee wished to continue to work for three more years and, in early 2006, he suggested to the defendant that he continue to work as a salaried employee or a consultant for that time. Those suggestions were refused by the defendant, but an ex gratia payment was offered. The employee informed the defendant that he was seeking legal advice, and the ex gratia offer was withdrawn.

In March 2007, the employee commenced proceedings, alleging that his expulsion from the defendant was an act of direct age discrimination and that the withdrawal of the ex gratia payment was an act of victimisation. The employment tribunal (the tribunal) identified three aims that were put forward, inter alia, as legitimate by the defendant: ensuring that associates were given the opportunity of partnership after a reasonable period as an associate, thereby ensuring that associates did not leave the firm (the first aim); facilitating the planning of the partnership and workforce across individual departments by having a realistic long-term expectation as to when vacancies would arise (the second aim); and limiting the need to expel partners by way of performance management, thus contributing to a congenial and supportive culture (the third aim).

It was made clear that the defendant did not rely on any poor performance by the employee or his personal characteristics. The tribunal accepted those reasons as legitimate, and accepted that compulsory retirement was an appropriate means of achieving the firm’s legitimate aims of staff retention, workforce planning and allowing an older and less capable partner to leave without compelling him to justify his departure and damage his dignity. It held that the first two of those aims could not be fulfilled any other way, and that there was no non-discriminatory alternative to the third. The tribunal did not examine the issue of the age chosen for retirement or discuss it in relation to each of the objectives.

The tribunal concluded that it was a proportionate means of achieving a congenial and supportive culture and encouraging professional staff to remain within the firm. The discrimination claim failed, but the victimisation claim succeeded. The employee appealed to the Employment Appeals Tribunal, which held that there was no evidential basis for the assumption that performance would drop off at 65 and hence no reason to have chosen that age in order to avoid performance management and promote collegiality. It remitted the case to the employment tribunal. The employee appealed to the Court of Appeal, which dismissed his appeal. The employee appealed to the Supreme Court.

Three questions arose: (i) whether any or all of the three aims of the retirement clause identified by the tribunal were capable of being legitimate aims for the purpose of justifying direct age discrimination; (ii) whether the defendant had not only to justify the retirement clause generally but also its application of it in the instant case (the outstanding issue); and (iii) whether the tribunal had been right to conclude that relying on the clause in the instant case was a proportionate means of achieving any or all of the identified aims. In considering the issues, the court had regard to the Employment Equality (Age) Regulations 2006, SI 2006/1031, by which the UK transposed Council Directive (EC) 2000/78 (on establishing a general framework for equal treatment in employment and occupation) (the directive) and the Equality Act 2010. The appeal would be dismissed.

Taking questions (i) and (iii) together, the case law suggested that the UK had chosen to give employers and partnerships the flexibility to choose which objectives to pursue, provided that: (i) those objectives could count as legitimate objectives of a public interest nature within the meaning of the directive; (ii) were consistent with the social policy aims of the state; and (iii) the means used were proportionate by being appropriate to the aim and reasonably necessary to achieve it. The European courts had identified two types of legitimate objective: inter-generational fairness and dignity (see [55]-[57] of the judgment).

The first two aims of the compulsory retirement age were staff retention and workforce planning, which were directly related to the legitimate social policy aim of sharing out professional employment opportunities. The third was limiting the need to expel partners by way of performance management, which was directly related to the ‘dignity’ aims recognised as legitimate in the case law. It was clear that aims could be related to the particular circumstances of the type of business concerned (see [67] of the judgment). As a result, the identified aims had been legitimate (see [67] of the judgment).

(2) Where it was justified to have a general rule, the existence of that rule would usually justify the treatment that resulted from it. In the particular context of inter-generational fairness, it had to be relevant that, at an earlier stage of his life, a partner or employee might well have benefited from a rule that obliged his seniors to retire at a particular age. The European court had distinguished between laws and regulations which were unilaterally imposed and collective agreements which were the product of bargaining between social partners on a presumably more equal basis. There was therefore a distinction between justifying the application of the rule to a particular individual, which in many cases would negate the purpose of having a rule, and justifying the rule in the particular circumstances of the business (see [65], [66] of the judgment).

As to whether the aims of the compulsory retirement age had been proportionate, since the case was to go back before the tribunal on the basis that it had not been shown that the choice of 65 years of age for retirement was an appropriate means of achieving the third aim, it was necessary to consider whether the tribunal would have considered the first two aims as sufficient in themselves. There was a difference between justifying a retirement age and justifying the particular retirement age in the instant case. Taken to extremes, the first two aims might be thought to justify almost any retirement age. The tribunal had not unpicked the question of the age chosen and discussed it in relation to each of the objectives. It would be unduly constraining to deny them the opportunity of doing so (see [67], [68] of the judgment).

The outstanding issue of whether the measure had to be justified would be referred to the tribunal (see [68] of the judgment). Decision of Lord Justices Laws, Hughes and Sir Mark Waller [2010] All ER (D) 309 (Jul) affirmed.

Robin Allen QC, Richard O’Dair and Dee Masters (instructed by Equality and Human Rights Commission) for the employee; Thomas Croxford and Emily Neill (instructed by Clarkson Wright & Jakes) for the defendant; Dinah Rose QC and Emma Dixon (instructed by the Treasury Solicitor) for the secretary of state for business, innovation and skills (intervening); Declan O’Dempsey (instructed by Irwin Mitchell) for Age UK (intervening).