Seldon v Clarkson Wright and Jakes (A Partnership)

Direct age discrimination may be justified only by public-interest social-policy objectives which are consistent with the state’s employment, labour-market or vocational-training policies. An employer’s business aims may qualify when they objectively advance those policies. Cost reduction, competitiveness or managerial flexibility alone cannot qualify.

The actual objective may be identified retrospectively, but it must genuinely be pursued and legitimate in the business’s circumstances. The measure must be appropriate and reasonably necessary. Its discriminatory effect must be balanced against the objective, with careful consideration of less discriminatory alternatives. A justified general retirement rule will usually justify its application to an individual, but both the rule and the particular retirement age require justification in the business context.

Seldon v Clarkson Wright and Jakes (A Partnership) concerned a partnership deed requiring equity partners to retire at the end of the year in which they reached 65. Mr Seldon retired under that clause and alleged direct age discrimination. The Employment Tribunal held that staff retention, workforce planning and avoiding contentious performance management were legitimate aims. It dismissed the discrimination claim but upheld a separate victimisation claim.

The Employment Appeal Tribunal, reported at [2009] IRLR 267, found no evidential basis for treating 65 as appropriate to the performance-management aim and remitted the proportionality question. The Court of Appeal dismissed Mr Seldon’s appeal in [2010] EWCA Civ 899, [2011] ICR 60.

The Supreme Court considered which objectives could justify direct age discrimination, whether a general retirement rule also required individual justification, and whether retirement at 65 was proportionate.

1. Appeal dismissed unanimously. Lady Hale, with whom Lord Brown, Lord Mance and Lord Kerr agreed, delivered the principal judgment. Lord Hope agreed fully and added supplementary reasons. The existing remittal to the Employment Tribunal on proportionality remained necessary.

2. Employment Equality (Age) Regulations 2006, regulation 3, had to be read consistently with article 6(1) of Council Directive 2000/78/EC. Direct age discrimination could be justified only by objectives of a public-interest nature relating to social policy, including employment policy, the labour market or vocational training. Purely individual considerations such as reducing costs or improving competitiveness were insufficient. Employers could nevertheless choose objectives which furthered the state’s social-policy aims.

3. The legitimate objectives recognised in the European jurisprudence fell principally into two groups: inter-generational fairness and dignity. Inter-generational fairness included access to employment, retaining older workers, sharing limited opportunities between generations and maintaining a generational mix. Dignity included avoiding humiliating dismissals for incapacity and divisive disputes about declining performance.

4. An objective did not need to have been articulated when the measure was adopted. It could be identified retrospectively, provided that it was the measure’s actual objective. Its legitimacy also depended upon the circumstances of the particular employment or business. An objective capable of being legitimate in principle might be illegitimate where the relevant recruitment, retention or performance-management problem did not exist.

5. The means chosen had to be appropriate and reasonably necessary. The tribunal had to scrutinise whether the measure advanced the objective, whether less discriminatory means were available and whether the discriminatory impact was justified by the objective’s importance. Justifying a retirement rule did not automatically justify the particular retirement age selected.

6. A justified general rule would usually justify its application to an individual because predictability and consistency might themselves be important. Requiring individual exceptions could defeat the rule’s purpose. The relevant distinction was between justifying the rule in the particular business and separately justifying its application to each person.

7. The firm’s aims of staff retention and workforce planning were connected to the legitimate social-policy objective of fairly sharing professional opportunities between generations. Avoiding contentious performance management was connected to the recognised dignity objective. Those aims were legitimate. The Employment Tribunal nevertheless had to determine whether retirement specifically at 65 was appropriate and reasonably necessary. It was to assess the circumstances in 2006, including the then designated retirement age for employees, although that fact was not conclusive.

1. United Kingdom Supreme Court: The appeal was dismissed unanimously: [2012] UKSC 16. The Employment Tribunal was still required to reconsider whether retirement specifically at 65 was proportionate.

2. Court of Appeal: Mr Seldon’s appeal was dismissed: [2010] EWCA Civ 899, [2011] ICR 60.

3. Employment Appeal Tribunal: The tribunal had lacked an evidential basis for finding that age 65 was appropriate to the performance-management objective. The justification question was remitted: [2009] IRLR 267.

4. Employment Tribunal: The direct age-discrimination claim was dismissed because the retirement clause was found justified. The separate victimisation claim succeeded.