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Is a mandatory retirement age for Partners enforceable?

Many GP Partnership Deeds include a compulsory retirement age for partners, often specified as age 65. Should a GP wish to continue working beyond this age, it is common for the Deed to require annual written approval from the other partners.

It is important to note that a retirement age from the partnership is different from a retirement age for your NHS Pension. So long as the Partnership Deed is drafted appropriately, it is perfectly possible to take 24 hour retirement to trigger the NHS Pension without also retiring from the partnership. The process and pitfalls associated with 24 hour retirement are the subject of a different article.

A long-running case regarding mandatory retirement ages for partners has recently been decided. The retiree was the senior partner at a law firm in Kent who was asked to retire at age 65 in compliance with the Partnership Deed. The courts found that in most circumstances it would be discriminatory to attempt to enforce such a clause. This is consistent with the normal position for employees.

The tribunal did however distinguish the situation for partners, and concluded that in certain circumstances it would be acceptable to enforce a compulsory retirement age where the overall benefits to the business merited doing so: “Any determination has to weigh up the needs of the partnership against the harm caused by the discriminatory treatment”.

The key features of the ‘business benefits’ considered by the tribunal were enabling career progression for junior lawyers and, to a lesser extent, avoiding awkward conversations with ageing partners about their deteriorating performance.

This is in some ways a surprising outcome, since in most progressive law firms aspiring partners are expected to achieve partnership by winning new work rather than simply taking over someone else’s hard-won clients, and a well drafted partnership deed should anyway address issues of underperformance.

Whilst it seems likely that every case will turn on its facts, the finding may be of particular relevance to GP practices. The career progression argument has particular resonance in a GP practice, as there is only limited opportunity for partners to ‘win new patients’. Also the question of declining performance is likely to be accorded greater consideration by a judge.

We recommend that if you are considering implementing or enforcing a mandatory retirement age you clearly document the business reasons for your decision, you ensure the retirement age is applied consistently, and you seek legal advice as the area is constantly evolving. Even the above tribunal concluded that their finding might have been different if the case had not been ongoing for 6 years.

Posted on July 1st 2013 in News and Publications, Newsletters

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