The facts

Martin Scott (Claimant) was an equity partner until his retirement in 2023, when, after previously having had his retirement date extended by three years to 63, the board and membership of Walker Morris LLP (Respondent) refused his application for a further two-year extension.

The suitability and legality of the Respondent's retirement policy had been questioned at various times by different partners, including the Claimant. In 2008, the membership considered the impact of the 2007 Employment Tribunal decision in Seldon and the retirement age of 60 was described as "potentially vulnerable to challenge". After much debate the Respondent finally adopted a revised retirement policy (Retirement Policy) in 2018 which retained the "presumptive" retirement age of 60, with the ability to apply for a three-year extension (approved by the board and the members) and an option to then apply for an additional two-year extension to 65. Any such extension was stated to be where performance was of an exceptional nature and a programme of passing goodwill through the extension period had been agreed. 43 out of the 45 partners present voted in favour of the Retirement Policy, including the Claimant.

Discrimination law

Age is a protected characteristic under the Equality Act 2010 (Equality Act). In its defence, the Respondent relied on section 13 of the Equality Act under which age discrimination can be justified if it is shown to be a "proportionate means of achieving a legitimate aim". Seldon established that a legitimate aim must (1) correspond to a real business need; (2) be of a public interest nature; and (3) pursue a social policy objective (e.g. intergenerational fairness). 

The Employment Tribunal judgment

The Tribunal found that the Respondent had two legitimate aims for its Retirement Policy, the first being workforce and succession planning and the second being to maintain a collegiate and cohesive environment between the membership. In finding that the Respondent had two legitimate aims, the Tribunal commented on the importance of keeping a record of decisions and the reasons behind decisions in order to be able to defend potential claims in the Employment Tribunal.

The Tribunal however found no evidence of the Respondent needing to "free up" equity to encourage the progression of younger partners. Whilst the Respondent's business did not grow for a number of years, there was no evidence that older partners remaining in the business was the reason for the lack of growth. The Respondent's witnesses were unable to identify anyone who had left because of a perceived lack of progression opportunities. The Tribunal found that, on the contrary, a 2015 presentation to the membership identified the retirement age of 60 as likely to cause a significant reduction in the number of partners over the coming years.

Whilst the Tribunal recognised that avoiding the difficult and potentially degrading performance management of older partners could be a legitimate aim linked to collegiality, it found no evidence that poor partner performance was an issue in the firm. It noted that the Respondent had an established process for reviewing partner performance (and identifying underperformance) through its remuneration committee (REMCO) and that profit points for partners could be reduced or increased through this.

The Tribunal found that the Respondent's performance management process ensured partners continued to perform at a high level. It described the former Managing Partner's suggestion that partner performance begins to decline in the latter years of their career as unsupported by evidence, "entirely anecdotal and based on his personal beliefs and perception". The Tribunal revisited Lady Hale's comments in Seldon on the purpose of age discrimination law being to address assumptions or stereotypes and described the former Managing Partner's views as "based upon assumptions and stereotypes about age".

In assessing whether the Respondent's legitimate aims were proportionate, the Tribunal considered: (1) whether the Claimant's treatment was appropriate and reasonably necessary to achieve the aims; (2) whether the Respondent could have achieved its aims in a less discriminatory way; and (3) the balance between the Claimant and Respondent's needs.

In relation to the aim of workforce and succession planning, the Tribunal noted the "cliff-edge" retirement age of 60 and the very high bar of exceptionality that applied to partners wanting to extend their retirement age. The Tribunal found no evidence that the Respondent's Retirement Policy advanced workforce succession planning either before or after the changes were adopted in 2018. No evidence was found to suggest senior partners were "hogging the equity", nor did any evidence suggest the respondent had difficulty recruiting, promoting or retaining young employees or that they were leaving because of a lack of opportunities to progress. The Respondent argued that it had promoted very few partners and was not hiring partners from other firms, but this was held to be unsupported. No convincing evidence was found to suggest that partner performance deteriorated at 60, 63 or beyond. In considering the option to extend the retirement age in the Retirement Policy, the Tribunal relied on Pitcher v Oxford University [2022] ICR 338 where the "the availability and granting of extensions to the retirement age did not sufficiently mitigate the discriminatory impact of the retirement age."

In relation to the aim of collegiality and cohesion, the Tribunal found limited evidence of deterioration in partner performance for partners in their fifties and sixties, or that partner performance had deteriorated by the age of 63. It described the former Managing Partner's views on older partners as unsubstantiated and based on discriminatory assumptions and attitudes about older partners. The Tribunal observed that it was not saying that performance can never deteriorate with age but merely that there was no evidence before it of performance deteriorating by the age of 63.

The Tribunal found limited evidence to suggest the Respondent had given serious consideration to less discriminatory alternatives to its Retirement Policy. The Tribunal suggested several alternatives it considered to be less discriminatory including (1) using career conversations to identify the short and long-term career goals of partners (perhaps as part of the REMCO process); (2) adopting a higher retirement age than 60 or 63; (3) adopting part-time working; and (4) strengthening the REMCO review process to deal with perceived partner underperformance.

Conclusions

The Tribunal noted how retirement law has evolved since Seldon: there is no longer a statutory default retirement age for employees. State pension age has increased and is due to increase again. Many have abolished retirement ages and those that have them usually have higher retirement ages.

In deciding whether the legitimate aims were proportionate, the Tribunal considered the impact of the Retirement Policy on those affected by it against the reasonable needs of the Respondent's business and emphasised the Retirement Policy's significant impact on those affected. It described the extension process requiring older partners to demonstrate "a different and higher level of performance" as "inherently discriminatory" and pointed to the alternative use of compulsory retirement provisions in removing underperforming partners.

Takeaways

In light of the Tribunal's decision, LLPs and partnerships should clearly review their retirement policies and consider whether they could potentially be deemed discriminatory by a Tribunal. Particular attention should be paid to the following comments and conclusions:

• mandatory retirement ages should be kept under regular review as to their justification;
• the importance of keeping detailed records of decisions and the reasons for decisions to be able to defend a potential Employment Tribunal claim;
• the fact that partners have supported a retirement age is a factor in determining proportionality but not the most important factor and not determinative;
• a retirement age can be discriminatory even if there is an option to extend it;
• requirements for partner performance should not differ because of age;
• justifications for a retirement age must be provable rather than theoretical with the need for supporting evidence; 
• firms are expected to consider whether there are less discriminatory alternatives available to a policy that still achieve its legitimate aim;
• the principles in the Supreme Court decision in Seldon continue to be relevant and good law; and
• the Tribunal stated that it was not finding that an employer can never justify mandatory retirement.