Age discrimination: could employers enforce early retirement?

The default retirement age (DRA) was abolished last year to prevent employees from being forced to retire at the age of 65. Younger employees itching for promotion may, however, be able to breathe a sigh of relief after a recent court ruling which may still assist employers to legitimately force an employee's retirement.

The supreme court's recent judgment in the case of Seldon v Clarkson Wright & Jakes puts a different gloss on last year's abolition of the DRA. Seldon, a partner at a law firm, was forced to retire at the age of 65 in accordance with the firm's retirement policy.

The supreme court determined that the firm's introduction of a compulsory retirement age was directly discriminatory, but at the same time noted that the Equality Act provided a defence to direct discrimination, where "it is a proportionate means of achieving a legitimate aim".

The employer in the Seldon case raised this very "proportionate" argument in that the compulsory retirement at 65 had the legitimate aim of facilitating lower level employees' ability to make the transition to partner level within a reasonable timeframe. The decision to retire was also made to prevent the need for subjecting senior partners to humiliating performance reviews, hence "retiring" them instead. The court accepted this argument.

This case paves the way for employers to retire workers at a fixed age, and it is for the courts to decide (if it gets that far) whether retirement at that particular age can be justified as being "proportionate". Whether the aim is proportionate will require an analysis of whether the decision to dismiss the employee at that age, rather than at a later age was appropriate and necessary in the circumstances.

The Confederation for British Industry has pointed out that the apparent flexibility afforded to employers via the Seldon ruling "does nothing to fill the vacuum left by the government's scrapping of the DRA". It argues that rather than there being a statutory right, employers must provide the legitimate business aims for a specified retirement age. It is also the case that employers do leave themselves open to discrimination or unfair dismissal claims brought by an employee if they force a retirement, and may have to go through a costly legal process to demonstrate that a company retirement age is justifiable.

Research conducted by charity Age UK suggests that in the next decade half the population will be more than 50 and the number of young people entering the workforce is already beginning to decline. Age charities such as Age UK, who campaigned for the abolition of the DRA would argue that the abolition of the default retirement age does not create a "job blocking" problem, where older employees saturate the market inhibiting young people from entering.

More than one million 16- to 24-year-olds are currently unemployed in the UK and the Department of Work and Pensions considers tackling youth unemployment a priority. The courts may well take a balanced approach when it comes to interpreting the Equality Act after the abolition of the DRA. Their aim will be to ensure age discrimination is not rife, while at the same time preventing the employment prospects of the next generation from being stifled.

Philip Landau is an employment lawyer at Landau Zeffertt Weir Solicitors

This content is brought to you by Guardian Professional. To get more content and advice like this direct to your inbox, sign up for our weekly Careers update.