Seldon v Clarkson Wright & Jakes

by Simon on January 24, 2012

Seldon v Clarkson Wright & Jakes

 

Introduction

It’s the case that employers and employees have been waiting for now for some time. Last week on 17 and 18 January 2012 the Supreme Court sat to hear the case of Seldon v Clarkson Wright & Jakes. Mr Seldon was represented by Robin Allen QC (Cloisters) and Richard O’Dair (36 Bedford Row). The Supreme Court have effectively been asked to decide when it can be justified to compulsorily retire someone. Employers have been eagerly awaiting it for the obvious reason of wanting to know how they should deal with their older employees. Employees similarly, both young and old, have been anxious to find out how the decision might affect their careers. We shall have to wait a little longer yet. In the mean time, here is how the courts have dealt with the issues, and the arguments that the Supreme Court will have to deal with.

Facts

Mr Seldon was a partner in a law firm. When he reached the age of 65 he was forced to retire. This was in accordance with the partnership deed.

Law

Mr Seldon bought a claim for direct age discrimination. He was being less favourably treated (forced to retire) because of his age (he had turned 65).

The law firm are arguing that they did not discriminate against Mr Seldon because of (what is now) s13(2) of the Equality Act 2010. Their case is that the compulsory retirement age of 65 was a “proportionate means of achieving a legitimate aim”.

They put forward three potentially legitimate aims:

  1. ensuring associates were given the opportunity of partnership after a reasonable period.
  2. facilitating the planning of the partnership and workforce across individual departments by having a realistic long term expectation as to when vacancies will arise.
  3. limiting the need to expel partners by way of performance management, thus contributing to the congenial and supportive culture in the firm.

 

The Employment Tribunal, the Employment Appeal Tribunal and the Court of Appeal all agreed (in various ways) that the firm was justified in dismissing Mr Seldon.

The first and second aims were together categorised as “dead men’s shoes” aims, and the third was described as the “collegiality” aim.

Dead Mens Shoes

Before the Court of Appeal Mr Seldon argued that the “dead men’s shoes” aim was not legitimate. It was not of a “social policy or public interest” nature.

Mr Seldon relied on the European Court of Justice decision of R (on the application of Incorporated Trustees of the National Council on Ageing (Age Concern England)) v Secretary of State for Business, Enterprise and Regulatory Reform (C-388/07) [2009] All ER (EC) 619 (known as Heyday). This was a reference made after Age Concern England challenged the legality of the Employment Equality (Age) Regulations 2006 (the Age Regulations).

In summary the Age Regulations said that you could set a compulsory retirement age of 65. Regulation 30 (2) said that “Nothing in Part 2 or 3 shall render unlawful the dismissal of a person to whom this regulation applies at or over the age of 65 where the reason for dismissal is retirement.”

These Regulations themselves derived from the Equal Treatment Directive 2000/78. In their Judgement the European Court of Justice (ECJ) effectively said that having a compulsory retirement age was ok, but only in respect of:

“. . .social policy objectives, such as those related to employment policy, the labour market or vocational training.”

They made a distinction between legitimate aims which were of a “public interest nature” and those aims which were not legitimate. This was because they related to “purely individual reasons particular to the employer’s situation, such as cost reduction or improving competitiveness.” They acknowledged that a “national rule may recognise, in the pursuit of those legitimate aims, a certain degree of flexibility for employers.” (paragraph 46) When the matter went back to the domestic court after this ECJ reference it was heard by Blake J [2010] ICR 260. He dismissed the attack on the Age Regulations.

In summary Mr Seldon’s argument is that “dead men’s shoes” is not a “social policy” or “public interest” aim. It is just an argument based on individual reasons. The law firm had not put forward any evidence to show that a retirement age of 65 was going to help in retaining associates. There were no associates waiting in the wings and there was certainly nothing approaching the “very high standard of proof” that the aim was legitimate (paragraph 67 of the ECJ decision).

The Court of Appeal did not agree. Sir Mark Waller does not give many reasons for his rejection of Mr Seldon’s attack on the “dead men’s shoes” aim (paragraph 22). His reasoning is simply that the Age Regulations could legitimately provide for compulsory retirement at 65. The law firm were acting consistently with whatever social aim had justified that legislative provision. It would therefore be contradictory to say that the law firm’s partnership deed was unlawful if the Age Regulations were lawful.

Collegiality

Mr Seldon also argued that the collegiality aim was illegitimate. His case is that avoiding the distasteful business of partners assessing others’ performance is a far cry from the “public interest” requirement which is necessary for a genuine legitimate aim. The preservation of collegiality within a firm is precisely the sort of “purely individual reasons particular to the employer’s situation” which cannot qualify.

Again, the Court of Appeal did not agree. Sir Mark Waller comments: “It seems to me that an aim intended to produce a happy work place has to be within or consistent with the Government’s social policy justification for the regulations” (paragraph 22).

Commentary

As Blake J noted in the High Court in Heyday, there is an “acute policy tension in this area”. On the one hand the Government want to encourage people to work longer so there is less of a burden on the state pension. On the other hand they want to make sure there is sufficient flexibility so that competitiveness can be maximized. Quite what, if anything, the Supreme Court will make of this “acute policy tension” remains to be seen.

 

The real difficulty for both employers and employees is that there is currently a state of limbo. The default retirement age of 65 which had been introduced by the Age Regulations has been abolished. This was done by the Employment Equality (Repeal of

Retirement Age Provisions) Regulations 2011. Since 1 October 2011 we have been living in a brave new world with no default retirement age. Since then an employer has had to decide whether or not they want to choose a specific retirement age. If so they can have their own Employer Justified Retirement Age. The crucial point here is that it must be justified. And the crucial point of Seldon is to consider what exactly is required by way of justification. The legal world awaits judgment

David Ball

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