65 is the New Retired in the UK: Vacation Day 4

While I’m on vacation, I’ve been paying notice to a British Supreme Court rule that has some jarring implications for hitting your 60′s in the UK.

This is kind of scary to me, what do you think? (Leave a comment!)

Thanks to HR Magazine, UK and Peter Bradley for providing information.

In a judgment published yesterday, the Supreme Court has left the door slightly ajar for allowing businesses to set their own retirement age for staff – but only if the reasons for doing so meet both their own and public policy objectives. It cautioned employers against adopting their own default retirement age (DRA) without careful scrutiny.

The case, viewed as one of the most significant for years on the issue of age discrimination, involved Leslie Seldon, a former senior civil litigation partner at law firm Clarkson Wright and Jakes (CWJ), who was required to retire at 65. Although the default retirement age (DRA) was abolished in October 2011, its exemption provisions had not been legally tested till now.

CWJ argued its retirement policy satisfied the exemption requirements of the DRA legislation, because: it allowed effective succession planning of partners and the workforce; provided associates with a clear opportunity of partnership, so aiding retention; and avoided the need to expel partners through performance management, (the ‘dignity’ point).

The Supreme Court accepted the principle that a private employer could have its own DRA, but it thought that there had not been sufficient scrutiny of whether the chosen retirement age of 65 was a proportionate means of achieving those aims at CWJ.

It sent the case back to the employment tribunal to carry out that closer examination. Only then will there be a final conclusion on the overall issue of whether this employer is entitled to have its retirement age of 65 for partners.

Richard Fox, partner and head of employment at law firm Kingsley Napley, added: “This is a significant decision not just for partnerships but all companies craving certainty and guidance about how to handle issues of retirement and succession. The abolition of the default retirement age and increasing numbers of people wanting to work longer to make up for inadequate pension provision, combined with economic pressure on jobs, is a real conundrum for employers. In that sense, the guidance offered by the Supreme Court today that it is possible to justify compulsory retirement on specific grounds, is very much to be welcomed.”

This decision doesn’t really give much more guidance to employers (other than, the gov’t is going to give you some room to do what you want, as long as you’re willing to litigate for a judgment) and tells older employees that they may not have a say in when they finish working, even if they are mentally and physically willing and able to continue past “retirement age.” And what happens to those older workers that are trying to make up for financial problems through the UK’s double-dip recession? Things to think about.