Top-tier law firm Allens expects its partners to retire at 65, which experts have suggested would be unlawful age discrimination.
The revelation expands the types of partnerships that continue to hold onto the historic notion that it is legal to mandate or expect senior partners to retire at a specific age.
Another law firm, King & Wood Mallesons, confirmed it also provides a financial incentive for partners retiring early between 55 and 58, although it no longer applies to equity partners admitted in the past six years.
Employment law experts said there is a perception among firms that partnership agreements are a superior form of commercial contract not subject to workplace laws. Louie Douvis
The practice continues despite the Age Discrimination Act, introduced in 2004, explicitly covering partnerships of more than six partners and prohibiting subjecting a partner “to detriment” based on their age.
A spokeswoman for Allens, which had 131 partners as of January, confirmed “it is generally expected that partners retire from the partnership at 65”. However, the expectation is not written into any partnership agreements.
King & Wood Mallesons, which has 165 partners, said that there is a financial incentive for partners who retire early that begins at the age of 55. Almost a quarter, or about 41, are older than 55.
The Early Retirement Scheme originally offered senior equity partners one-and-a-half years’ income paid out over a five-year period if they left the firm between the ages of 55 and 58. The payment is being reduced as the scheme is phased out.
“The Early Retirement Scheme was phased out for new partners in 2012. KWM is confident that its partnership arrangements are not age discriminatory. Partners choose to retire at different ages and for different reasons,” a spokesman said.
Other law firms contacted by the Financial Review, including MinterEllison , Herbert Smith Freehills, Clayton Utz, Gilbert + Tobin, Dentons, Ashurst, all said they did not have an expected or mandatory retirement age for partners.
Partnerships not above the law
Employment law experts said there is a perception among firms that partnership agreements are a superior form of commercial contract not subject to workplace laws.
“I don’t think people think about human rights when they’re looking at partnership agreements,” said Carol Andrades, consultant to Ryan Carlisle Thomas and an expert in discrimination law.
However, she said even if a firm expected, rather than mandated, partners to retire at a certain age, it would still be treating someone differently based on their age.
“Compulsory retirement of a partner at a certain age or if it generates an expectation that a person would leave at a certain age would in my view breach the Age Discrimination Act.”
The same principle would apply to those at 65 years, which although viewed as the traditional retirement age cannot be enforced as such by a firm unless it meant a person could not perform the inherent requirements of their job.
In 2014, the Federal Court hit a Queensland Thai restaurant with almost $40,000 in fines and compensation for sacking a waiter because he reached the retirement age of 65 years.
The decision was one of the few made under age discrimination laws, despite lawyers saying the issue was common in workplaces.
“People seem very reluctant to use it and I think it’s largely a question of people self-silencing,” Ms Andrades said. “Of all the acts, it’s one of the least used ones.”
Maurice Blackburn principal Giri Sivaraman said he had represented clients at the most senior levels who had been forced out of their jobs as they approached 60, including general managers and CEOs. However, the cases resulted in settlements rather than proceeding to court.
Broader societal issue
McDonald Murholme principal lawyer Andrew Jewell said firms’ use of specific retirement ages pointed to a broader societal issue where, of all the prohibited discriminations, age was still viewed as the most acceptable.
“If you had a similar clause saying if you become pregnant, you give up your partnership, or you have a performance review, that would be front page of the paper.”
Andrew Jackson, an executive search consultant and partner at Maven Partners, who specialises in executive search for professional service firms, said his firm usually had several partners on their books who were nearing or past the retirement age at their respective firm.
“It should be something [the firms] look at but I don’t think it’s likely to change,” Mr Jackson said. “I think given the longevity of people’s lives there needs to be more flexibility around retirement, especially if they feel they have something to add.”
Reference: Allens expects partners to retire at 65, KWM pays them to leave at 55 , The Financial Review, Wednesday 2nd May 2018.