Compulsory retirement and age discrimination: Tribunal rules against law firm

Background

In the case of Scott v Walker Morris LLP, the claimant was an equity partner at Walker Morris LLP. This meant his relationship with the firm was governed by the terms of a Members' Agreement.

The claimant was due to retire on 30 April 2020, in accordance with the retirement policy for partners set out in the Members' Agreement. The policy allowed partners to apply for an extension to their membership if they wished to continue working beyond the age of 60. A partner could apply for an extension of up to three years if they could demonstrate an "exceptional contribution" to the firm. After the first extension, a further request could be made at age 63 to extend membership until the age of 65.

Under the Equality Act 2010, age is a protected characteristic, and direct age discrimination occurs when an individual is treated less favourably because of their age and the treatment cannot be justified. Justification must be both legitimate and proportionate and supported by cogent evidence

In this case, the respondent employer admitted that the termination of the claimant's membership due to his age constituted less favourable treatment. However, the respondent argued that its actions were justified as a proportionate means of achieving legitimate business objectives, such as protecting the firm’s interests and ensuring inter-generational fairness among its partners.

Tribunal’s decision

The Tribunal focused on whether the respondent's justification for the compulsory retirement age was proportionate(ie was it appropriate and reasonably necessary). The respondent put forward several justifications for its retirement policy. First, it argued the policy helped maintain a cohesive and collegiate atmosphere among partners, avoiding potentially difficult and degrading performance management of older partners. Second, the firm suggested that the policy supported workforce and succession planning, ensuring that there were enough partners to maintain the business’s profitability and stability.

However, the tribunal found that while these aims were legitimate, the firm's approach was not an appropriate or reasonably necessary means of achieving them. The Tribunal noted that the respondent failed to provide cogent evidence to support its justification, particularly that:

• Poor performance at partner level was an issue for the firm
• The retirement policy contributed to workforce or succession planning
• The firm's existing performance management procedures were inadequate

Additionally, the Tribunal found that less discriminatory alternatives could have been implemented. These included career conversations with partners to plan short- and long-term goals, increasing the potential retirement ages, or adopting a phased retirement model where equity reduced over time.

The Tribunal concluded that while the firm's aims were valid, its approach was not justified as a proportionate means of achieving them.

Key takeaways for employers

This case reinforces that employers must carefully evaluate their retirement policies. Mandatory retirement ages are not inherently unlawful, but they must be objectively justified with strong evidence. Employers cannot simply rely on broad objectives such as inter-generational fairness; they must demonstrate with clear, cogent evidence that their approach is necessary and proportionate.

Employers with compulsory retirement ages should keep their retirement policy, and the evidence for it, under regular review. It may also be helpful to explore alternative arrangements to see if a potentially less discriminatory model will achieve the business aims behind the compulsory retirement age.

The tribunal will now determine an appropriate remedy.

For more information or advice, please contact Rory Jutton in our Employment team on 0117 314 5286, or complete the form below.