Retirement: the real story

David Faulkner

Can you make employees retire or not?

Many universities and colleges have dispensed with retirement ages altogether since the national default retirement age (DRA) was abolished last year. Others have kept a retirement age for certain groups of employees, whilst still others are waiting to see how the law develops in the “no national retirement age” era. Most of you reading this blog will be aware by now that the Supreme Court handed down an eagerly anticipated decision dealing with this issue on 25 April in the case of Seldon v Clarkson, Wright and Jakes. The problem is some commentators are saying it makes forcible retirement more difficult, others that it makes it more straightforward. So which is it?

This is most definitely one of those times when reading the Court’s decision is likely to make things more confusing. As is often the case, it leaves many key questions unanswered. What do we now know?

  1. A fixed retirement age is, of course, direct age discrimination; the issue to focus on is whether it is “a proportionate means of achieving a legitimate aim”.
  2. This means first of all that a retirement age must be designed to achieve “social policy” aims - workforce planning, keeping junior staff, avoiding the often undignified alternative of performance management, and achieving a balanced and diverse workforce. These are fairly broad categories, but the case does mean that anything outside of these parameters will not suffice.
  3. This isn’t a labelling exercise. You would need to be able to produce evidence that this is an aim which makes sense in your particular context. Easy example: if you have no evidence of difficulty in keeping junior staff, that won’t be a legitimate aim for you.
  4. Once you’re satisfied your retirement age is trying to achieve the right things, the next question becomes whether the particular age you’ve chosen is “appropriate” and “necessary” for achieving that goal. That’s where it becomes difficult. What age do you pick?
  5. It’s clear from Seldon that prior to its abolition in April 2011 the national DRA was a significant factor supporting an employer’s decision to pick age 65. The absence of a national DRA portends difficulty for employers whatever age is chosen in the post-April 2011 world.
  6. The Supreme Court also said you have to consider other options. This might mean other ages than the one you’ve chosen, though except in certain manual jobs it is going to be difficult to get evidence of why a particular age is required.
  7. It will also mean looking at whether alternatives to retirement – such as offers of flexible working or alternative roles – would be equally effective, given that they are likely to have less of an adverse impact on staff. Trying those kinds of arrangements first, and then weighing up a fixed retirement age if they don’t work (for example if you start to encounter problems in retaining junior staff), is likely to be the best evidence you could hope for if you find yourself in Tribunal explaining a decision to enforce a retirement.

In summary, Seldon has probably made it more difficult to force employees to retire, not least in the short term because of the considerable publicity the case has generated. But don’t write off the possibility of a fixed retirement age altogether, particularly if other measures don’t deliver a balanced workforce, staff retention, effective planning and the like. And if you do re-examine the retirement option, make sure it’s more than a tick-box and labelling exercise. Then, just maybe, retirement ages won’t be ancient history after all.

David Faulkner
Partner
Education Team
For and on behalf of SGH Martineau LLP
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From → General Interest

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