AGE DISCRIMINATION, it has been said, is the last bastion of discrimination in the workplace. In law firms, the compulsory retirement of partners is common — with the retirement age becoming younger and younger even as the general population lives and works longer. In the City of London, few senior partners are older than 55, so at an age when a judicial career may be at its peak, the City lawyer is forced to make way for thrusting junior partners.

But from October, middle-aged lawyers need no longer be on the scrapheap or turning their thoughts to golf and gardening. Regulations on ageism that herald a new era come into force in the workplace. They will ban direct and indirect discrimination on the ground of age — in recruitment, promotion, training and the provision of benefits. Companies wanting to set a retirement age of anything less than 65 will need to justify it objectively, and today’s upper age limit for unfair dismissal claims and redundancy rights will be abolished.

As with other anti-discrimination laws, the Employment Equality (Age) Regulations apply not only to employees but also to partners and members of limited liability partnerships. They apply equally to young and old (in contrast to the United States where you have to be on the “wrong” side of 40 to invoke the federal law). Any discrimination has to be objectively justified as a proportionate means of achieving a legitimate aim. Compensation is uncapped.

The gestation period has been long. Age discrimination has been prohibited by federal US laws since 1967, and the European framework directive that lies behind this domestic legislation was — after much toing and froing — finally promulgated in 2000. The regulations for England and Wales were published this month.

What do they mean for law firms? Last week the Law Society of England and Wales urged solicitors to beware of the laws, saying that they apply to the compulsory retirement of partners without limitation. But the impact goes much wider.

Four main questions arise. First, can the general practice of having a graduate-only entry to training contracts survive? Such a system is plainly indirectly discriminatory, in that it prevents applications, roughly speaking, from anybody under 21. It must therefore be objectively justified.

Many law firms have successful partners, generally at the senior end, without degrees. There must be a doubt as to whether firms can continue to exclude non-graduates from consideration presumably on the basis of a need for academic achievement or the cost of putting them through the five years’ training that the Law Society requires of trainee solicitors without a degree. Might the Law Society itself have to rethink its entry requirements? The other side of this coin is whether firms can justify targeting their recruitment drives on university students to the exclusion of more mature applicants.

Secondly, will these regulations sound the death knell to lockstep, the system in which profits are shared on a sliding scale according to length of service as a partner? This system means that a partner aged 35 typically cannot earn as much as one of 45. It is therefore indirectly discriminatory and will have to be justified. The regulations allow a length-of-service criterion provided that it fulfils a business need, for example by encouraging loyalty or motivation, or rewarding the experience of some or all of the workers. It would seem likely that lockstep would fall within this exception. But the reward has to be according to the length of service, and this creates problems for lateral hires brought in on a particular rung of the lockstep. The firm would be left having to show that the overall system was objectively justified as a proportionate means of achieving a legitimate aim, for example expanding the business and improving its profitability. One way or another I expect lockstep will survive these regulations.

Thirdly, what about retirement ages? Self-evidently, a fixed retirement age is discriminatory. It has to be justified, although there is a default retirement age of 65 in employment that requires no justification. Retirement ages had been tumbling down in City partnerships. Remarkably, Clifford Chance, a pre-eminent member of the much envied “magic circle”, has a retirement age of 50, although it is sometimes extended to 55. By contrast, some of the American firms, and there are now more than 100 operating in London, have no retirement age, and seemingly believe partners reach their zenith in their sixties. As the default age does not apply to partnerships, there will be a natural tendency for firms to stick to their existing ages on the basis that they may as well seek to justify them as any other age, but this cries out for challenge, and the more mature members of the legal fraternity will follow the early cases with acute interest.

Fourthly, will the regulations prevent the early compulsory retirement of partners in their fifties — from their perspective for no reason other than that their best years are thought by colleagues to be behind them, and their profit shares are needed to accommodate new partners without diluting the equity? Any such laying-off of a partner may expose a firm to an uncapped compensation claim that could run to millions. Sidley Austin is reportedly facing such a claim in the American federal courts brought by the US Equal Employment Opportunity Commission.

It may well be that one longer-term consequence of the new laws will be to raise the average age of partners in the larger City firms. This would be recognition, at last, that they have something to give — no bad thing in a profession where experience counts.

The author is an employment and human resources partner at CMS Cameron McKenna LLP

TIPS FOR PLANNING AHEAD
By Julian Taylor, Head of employment law training, Simmons & Simmons

EMPLOYEES SHOULD

EMPLOYERS SHOULD

Take care in how they refer to colleagues and be careful about giving offence (calling someone an “old git” or putting up birthday posters emphasising someone’s age may be as offensive to some as a racist remark)

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