Compulsory retirement age for partner not justified

The Employment Appeal Tribunal (EAT) has confirmed that although a rule which required partners to retire at 65 was potentially justifiable, it had not been justified in this case as there was no evidential basis for the assumption that a partner's performance would deteriorate at that age.

In Seldon v Clarkson, Wright and Jakes, a partner in a firm of solicitors issued a claim under the Employment Equality (Age) Regulations 2006 after he was compulsorily retired at the age of 65. Although setting retirement ages of 65 or above is not discriminatory in the case of employees, this does not apply to partners, so any provision in a partnership agreement which requires partners to retire at a particular age therefore could be discriminatory unless it can be objectively justified.

As reported in January last year, the tribunal held that whilst the retirement provision was directly discriminatory, it was a proportionate means of achieving a legitimate aim and was therefore justified. The legitimate aims included:

• ensuring that associates were given the opportunity of partnership after a reasonable period, thereby ensuring that they do not leave the firm;
   

• facilitating the planning of the partnership and workforce across individual departments; and
   

• limiting the need to expel partners by way of performance management and contributing to the congenial and supportive culture in the firm.

The EAT held that whilst the tribunal was entitled to conclude that the first two objectives were legitimate, the last objective was problematic. The EAT confirmed that this objective did justify the adoption of a compulsory retirement age but the tribunal was not entitled to form the view that the objective itself justified fixing that age at 65.

There was no evidential basis for the assumption that partners should be retired at 65 because performance drops off at that age. Whilst this is the age at which employees may be compulsorily retired under domestic law, this provision is adopted for national labour market considerations rather than because performance is deemed to deteriorate at that age. The case was returned to the tribunal to consider whether the firm's policy could be justified on the first two objectives alone.

Statutory dispute resolution procedures: transitional provisions

The welcome news for many employers this year is that the controversial and often unworkable statutory dispute resolution procedures are due to be repealed on 6 April 2009.

It is worth noting, however, that there are transitional provisions and the statutory procedures may continue to apply after 6 April 2009 in certain circumstances. The transitional arrangements are as follows:

- the statutory disciplinary and dismissal procedures will continue to
- apply where on or before 5 April 2009, the employer has:

• complied with Step 1 or Step 2 of the standard procedure (i.e. broadly, written to the employee explaining the nature of the allegations and invited the employee to a disciplinary meeting, or, held the disciplinary meeting) or Step 1 of the modified procedure (i.e. broadly, sent the employee a letter setting out the alleged misconduct and the basis for thinking at the time of the dismissal that the employee was guilty of misconduct);
   

• taken relevant disciplinary action against the employee; or
   

• dismissed the employee.

- the statutory grievance procedures will continue to apply where:

• the action about which the employee complains occurs wholly before 6 April 2009; or
   

• the action which forms the basis of the grievance begins on or before 5 April 2009 and continues beyond that date and the employee presents a complaint to the employment tribunal or submits a valid grievance on or before 4 July 2009 or on or before 4 October 2009 (depending on the type of claim).

Employers need to take care to clarify whether the old or new dispute resolution regime applies. If in doubt as to the application of the transitional arrangements, please contact us for further assistance.

Temporary Agency Workers Directive - implementation 

Redundancies at a price

Although redundancy is on the agenda for many employers this year, it should in fact be a last resort as businesses review their costs, according to the Chartered Institute of Personnel and Development (CIPD).

The CIPD has estimated that the real cost of redundancy can be more than £16,000 for every employee laid off and this is before hidden costs such as higher labour turnover and a fall in staff productivity are taken into account. The CIPD considers this to be a conservative estimate and states that redundancies should be a last resort in the downturn, when employers should be planning for recovery, rather than reducing their workforce.