Law on Default Retirement Age Clarified

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The Supreme Court passed judgement this week, allowing companies to set their own retirement age for staff provided that the reasons for doing so met the objectives of both the Company and public policy. Employers should however tread cautiously… Leslie Seldon had been a senior civil litigation partner at the law firm, Clarkson Wright and Jakes and was required to retire when he reached 65 years of age. The default retirement age (DRA) was abolished in October, 2011, but this is the first occasion that its exemption provisions have been tested legally. The law firm stated that its retirement policy was exempt from the requirements of the DRA legislation as it allowed:
  • Effective succession planning of both the workforce and partners
  • Provided associates with an opportunity of becoming partners in the firm, thus aiding retention, and
  • Avoided the need to dismiss partners as a result of poor performance.
The Supreme Court acknowledged the principle of a private company having its own DRA but questioned whether there had been sufficient scrutiny of whether the chosen age of 65 was a proportionate means of achieving those aims in Clarkson Wright and Jakes. The case was therefore returned to the employment tribunal to further examine this issue. The result will offer a final conclusion on whether this firm was entitled to set its retirement age for Partners at 65. Reactions to the decision have been mixed and the judgement will be eagerly awaited as the outcome will provide businesses with much clearer guidelines regarding their retirement policies since the abolition of the DRA in October 2011. By far the safest course of action by employers will be to remain without a compulsory retirement age so as to avoid lengthy and costly legal proceedings if they tried to introduce one.

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