Retirement ruling leaves employers to justify imposing
retirement
Employment Law & HR update 09/05/2012
The highest court in Britain - the Supreme Court - has given
some guidance on how employers might justify imposing a retirement
age, but the ruling still leaves employers open to costly and
potentially lengthy Employment Tribunal claims from any employees
they dismiss by reason of retirement.
The court ruling concerned the case of Kent lawyer, Leslie
Seldon, who had claimed he had been unfairly treated when he was
forcibly retired when he turned 65. The case concerned retirement
from a partnership which was not covered by the default retirement
age of 65 at the time Mr Seldon was dismissed. It will be of
interest to all employers now that the default retirement age has
been abolished across the board.
The judgment ruled that it is permissible for employers to seek
to retire employees on broad social grounds. These might include
considerations such as fairness between the generations (i.e.
retiring older employees to make way for young people starting or
progressing their career) and dignity (i.e. avoiding the need to go
through unpleasant performance management procedures before older
employees can be dismissed).
However, employers would have to justify their policies and
prove that they were genuine if they sought to impose a retirement
age on these “social” grounds.
In the case of Mr Seldon, the law firm had written policies on
matters such as imposing limits on the number of Partners and
allowing for lawyers to progress to become Partners, which
supported their case for imposing retirement. But the Supreme Court
sent the case back to the Employment Tribunal to decide whether the
employer had in fact justified the retirement age and whether 65
was an appropriate retirement age.
Giving the lead judgement in the case, Lady Hale indicated that,
in the current climate of high youth unemployment, it might be in
the public interest for older staff to leave companies to allow for
more opportunities for younger workers.
She added, however, that the UK could not afford to make
sweeping assumptions about the professional capabilities of older
workers particularly as, due to rising longevity, “the younger
generations need the older ones to continue to be self-supporting
for as long as possible.”
What the ruling means
- Employers can seek to justify having a retirement age in their
business on broad social grounds
- These grounds include succession planning and avoiding the need
for undignified performance measures being taken against older
workers
- It is for Employment Tribunals to decide whether the employer
has met these broad social aims and that having a particular
retirement age is proportionate and actually achieves these
aims
Commenting on the Supreme Court’s ruling, Nick Soret, RBS
Mentor's Head of Employment Law & HR Consultancy Support,
said:
“This ruling will be welcomed by many employers who will have
found themselves struggling with how to approach the retirement of
older workers following the abolition of the default retirement age
last year.”
“But the ruling is not clear cut. It only sets the ground rules
and employers will still need to justify their reasons for setting
a particular retirement age.”
“Employers who seek to set a specific retirement age are very
likely to find themselves in an Employment Tribunal – with all the
costs and disruption that entails – to justify their reasons.”
“It also seems clear that employers are unlikely in most cases
to be able to justify having a retirement age as young as 65.”
For details on how
RBS
Mentor could help your
business in situations like this and many others, contact us today. If you
already subscribe to Mentor, please call the Advice
Service.
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