David Ogilvy: Pretty much as you were for senior staff of a certain age

Share this article

With an ageing population and the accompanying rise in the nation's welfare bill, it makes sense for those who want to work past their traditional retirement age to be enabled to do so, and this is very much the stance of the coalition government at Westminster.

It is fashionable in employment law and human resources (HR) circles to predict that the abolition of the default retirement age (DRA), as part of the Equality Act, will have a profound and lasting effect on the labour market and that from October 1, chaos and uncertainty will reign supreme.

Many say that the effect of the Equality Act will be to prevent dismissal when an employee reaches a certain age.

But will that really be the case? I contend that the real hurdle for employers who wish to dismiss staff at a certain age is likely to be the existing legislation on unfair dismissal, not legislation on age discrimination.

I would actually go so far as to predict that if the hurdle of unfair dismissal legislation can be overcome then, once the dust has settled, life will return to very much what it is today and the vast majority of more senior executives will still retire (voluntarily or otherwise) at 65 years of age.

"But" I hear you cry, "surely the abolition of the DRA is specifically designed to enable employees to work beyond 65 years of age to supplement whatever meagre pensions they are able to draw down?"

Of course, that is correct. At a political level the objective is very clearly to give employees the opportunity to remain in employment beyond 65 years of age regardless of their financial status.

However, the legislation provides that acts of discrimination on the grounds of age can be justified if they are a proportionate means of achieving a legitimate aim.

The defence of justification has been examined by the courts before in the context of partnership. In the English case of Seldon v Clarkson, Wright & Jakes the partnership sought to argue that their decision to retire Mr Seldon was objectively justifiable and was a proportionate means of achieving a legitimate aim.

The partnership put forward three justifications.

One was to ensure that junior lawyers were given a reasonable opportunity of partnership after a reasonable period of time.

Another was that it was necessary to facilitate the planning of the partnership by having realistic long-term expectations as to when partnership vacancies might arise.

Finally, they argued that it was necessary to maintain the congenial and supportive culture of the firm by limiting the need to expel partners on the basis of performance.

The Court of Appeal in England decided that all three aims were legitimate.The case is under appeal and so the outcome should not be regarded as settled.

Moving forward, employers have two choices. The first option is to dispense with the whole concept of retirement as a compulsorily imposed form of termination of employment. This would essentially necessitate the employer waiting for the employee to resign when the employee has decided of his or her own accord to give up work.

The second option would involve the employer relying on one of the other potentially fair reasons for dismissal as may be appropriate in the circumstances.

Attempts to rely upon a legitimate aim which was not consciously recognised when the decision was made will be problematic. However, if the grounds relied upon in Seldon are upheld, it is likely that it will become easier to justify "retirement" in relation to executives holding senior positions rather than junior ones with succession planning and transition management more likely to be an issue at that more senior level.

Time will tell, but clearly if the justification arguments are upheld, then at least at a senior level there may not be the fundamental shift in employment policy which many in employment law and HR circles have predicted.

• David Ogilvy is a partner and head of employment and dispute resolution at Turcan Connell