May 16

Landmark ruling on compulsory retirement age.

A landmark ruling by the UK Supreme Court last week has said that employers are entitled to set a compulsory retirement age if they can prove there is a legitimate reason for doing so. This is despite the change in the law last October which stopped employers compulsorily retiring workers at 65. The important distinction with this ruling is that the Court only said it was acceptable to force an employee to retire, not that it was acceptable to force a retirement at 65. It is therefore possible to justify a retirement age, not the retirement age of 65.
The Court set out new guidelines enabling an employer to dismiss on grounds of age, as follows:

  • They must consider a range of alternatives to retirement
  • They must be able to show specific public interest justification in each 
case where retirement is imposed – ie:
  • It will make it easier to recruit younger workers
  • It will enable promotion of middle management
  • It will enable employers to plan their workforce for the future and train others
  • It will enable the careers of older workers to end with ‘dignity’, rather than being dismissed for poor performance
  • They need to show they have considered other options such as flexible working hours or allowing employees to stay on for a short period.

What is important is that employers need to show these aims are legitimate and are being genuinely pursued. For example, improving the recruitment of young people in order to achieve a balanced and diverse workforce is, in principle, a legitimate aim. However, if in fact there is no problem in recruiting the young and the problem is in retaining the older and more experienced workers then it may not be a legitimate aim for the business concerned.
The situation following this ruling ought to be welcomed by employers. The legislation that came in to force in October, preventing compulsory retirement at 65, caused uncertainty as they were worried about asking workers aged 65 or over to leave the business for fear of being accused of ageism. This Court ruling has made the law clearer in that it reinforces the fact that workers cannot be retired just because of ‘stereotypes’ of age, but is very clear about the fact that they can be forced to retire where a business can justify a compulsory retirement age based on legitimate aims, provided they are proportionate.

This Court ruling has not specified what the correct age is to retire somebody – rather, it has sent the clear message that the abolition of the default retirement age of 65 does not mean employees cannot be retired at a given age, it just means it needs to be a more considered decision than previously was the case.