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The British Government abolishes the compulsory retirement age
As recently reported in the press, the Department for Business, Innovation & Skills has confirmed that the default retirement age will be abolished from 1st October 2011 (with phasing in).
Basically ignoring the concerns expressed by employers during the consultation process, the government's Response to Consultation Paper says that it considers that the dismissal of older workers should be managed either by discussion or by formal performance management procedures.
Transitional Provisions:
The Default Retirement Age is being phased out over a six month transitional period running until 30 September 2011. During this period retirements that have already begun can continue to completion if:
- a notification of impending retirement was issued by the employer prior to 30 March 2011
- a late notification is issued between 30 March and 5 April 2011
- the date of retirement falls before 1 October 2011
- the DRA procedure, as set out in the previous Employment Equality (Age) Regulations 2006 is followed correctly (including the employee's right to request to stay on is given serious consideration by the employer)
- the other requirements of the former DRA procedure are met (e.g. the person is 65 or over; or is the employers' normal retirement age if this is higher than 65).
Retirement using the Default Retirement Age will cease completely on 1 October 2011.
The provision allowing the short two week notice of retirement, will also cease on 6 April 2011, and this short notice procedure will not be permitted after this date.
The last day employees can be compulsorily retired using the DRA (default retirement age) is 30 September 2011, so the last day to provide 6 months' notice required by the DRA provisions is therefore the 30 March 2011.
Employers will not be able to issue new notifications of retirement using the DRA on or after 6 April 2011.
From 1 October 2011 no employee can be compulsorily retired by an employer because they have reached the age of 65 unless that retirement can be objectively justified.
Key things to remember:
- Workers will retire when they are ready to, enforced retirement will only be possible if it is objectively justified
- You must avoid discriminating against all workers on the grounds of age
- This legislation will be applicable to all employers and all company sizes and sectors
These changes do not affect an employee's state pension age and entitlements, which may well be separate from the age at which they retire.
Justified Retirement:
Even without the DRA, it may still be possible to retire an employee lawfully at a set age provided that the retirement age can be objectively justified, which means that it is a proportionate response to a legitimate aim. We refer to this in our guidance as Employer Justified Retirement Age (EJRA).
The justification of a set retirement age will be particularly important in the event that such a policy is challenged in an employment tribunal. Case-law around EJRA will develop once the DRA has been abolished.
Currently EJRAs tend to be used in exceptional circumstances in which an employer has a retirement age under 65. For example, posts in the emergency services which require a significant level of physical fitness or other occupations requiring exceptional mental and/or physical fitness such as air traffic controllers.
Employers who wish to use an EJRA need to consider the matter carefully. They will need to ensure that the retirement age meets a legitimate aim, for instance workforce planning (the need for business to recruit, retain and provide promotion opportunities and effectively manage succession) or the health and safety of individual employees, their colleagues and the general public.
As well as establishing a legitimate aim an employer will also need to demonstrate that the compulsory retirement age is a proportionate means of achieving that aim.
The test of objective justification is not an easy one to pass and it will be necessary to provide evidence if challenged; assertions alone will not be enough. When looking to establish an EJRA it can be helpful to first set out the reason why you wish to do so clearly on paper. Then ask yourself whether you have good evidence to support this reason and then finally consider if there is an alternative, less or non-discriminatory way of achieving the same result.
Throughout, you should always remember that you need to show ‘objective' justification not ‘subjective' justification. Having established an EJRA, any retirement of an employee as a result will be considered as a dismissal for some other substantial reason.
Employers should also follow a fair procedure in retiring people at the compulsory retirement age. You should give the employee adequate notice of impending retirement and, if circumstances permit, consider any request by an employee to stay beyond the compulsory retirement age as an exception to the general policy – although it would be important in such circumstances to ensure consistency of treatment as between employees who might request to stay on.
Workplace Discussions:
ACAS say that whatever the age of an employee, discussing their future aims and aspirations can help you identify their training or development needs and provide an opportunity for you to discuss your future work requirements and how these impact on the employee. These discussions may be new for some employers whilst for others they may be a normal part of their management process. It is for you to decide whether you wish to hold workplace discussions or not but they are a good way of raising the issue of retirement with older employees.
For all employees workplace discussions may involve a discussion around where they see themselves in the next few years and how they see their contribution to your organisation. These discussions can take place as frequently as you see fit but it is good practice to hold them at least annually. Whatever the size of your organisation, these discussions can be simple, informal and confidential.
Basically you need to have regular appraisals, and set clear and objectively measurable objectives for all staff, not just those aged over 65.
Some Questions:
Question: I have an employee who is not performing as well as I would wish, I was hoping to use the DRA to dismiss him when he reaches 65 but now cannot do this because the law has changed. What can I do?
You may use one of the reasons for fair dismissal. However, a workplace discussion can help you better understand the employee's intentions regarding their retirement. If they intend to retire then you can allow this to happen but remember an employee can change their mind. Where an employee is performing poorly and their performance cannot be improved, you have the option of dismissing them on the grounds of capability.
Question: Do I have to have a retirement discussion with my employees?
No, there is no requirement to talk to employees about their future plans but you may find it helpful to do so for your own organizational and succession planning purposes.
Question: If I discuss retirement with an older worker can I leave myself open to a claim of age discrimination?
Not if properly handled. Employers may reasonably want to know about an employee's future aims and aspirations. The important thing is not to single out older workers. If you are going to ask older workers about their plans it is good practice to also ask other, younger workers, about their plans as well, perhaps as part of an annual appraisal meeting.
Question: What can I say to an older employee at a meeting to discuss their future plans?
It is best if you start any discussion in a general way. Perhaps asking the employee what their future plans are or how they see themselves developing in your organisation over the next year or so. Any direct questions such as "are you planning to retire in the near future" or "you seem to have been slowing down of late, have you thought about retirement" are best avoided. Once an employee has indicated that they do wish to retire there is no problem in talking to them about the date for their retirement and any adjustments they may wish to make to their working arrangements or hours in the lead up to retirement.
Question: Can I protect myself by getting an employee to sign a contractual agreement that they will retire at a certain date?
There is nothing to stop you from coming to a contractual agreement with an employee about their future retirement date but it is unlikely to have any legal force. Employees cannot sign away their employment rights except in certain circumstances where they are legally advised and sign a compromise agreement. Compromise agreements can only be made however, where an employee has a case they can bring to an employment tribunal eg, for unfair dismissal, which is unlikely to be the case in these circumstances as they employee will still be in employment.
Question: What can I do if an employee had indicated that they will retire on a certain date but then do not do so?
If an employee has given formal notice to leave, you are under no obligation to let them withdraw their notice. However if an employee tells you during a discussion that they are planning on retiring, they may change their minds before formal notice is given.
This article has been reproduced in part and summarised in part from guidance produced by ACAS. For further information see www.acas.org.uk/index.aspx?articleid=3203
About the Author
James Carmody is an Employment Solicitor advising on UK employment law in Central London. www.reculversolicitors.co.uk www.kent-employment-solicitors.co.uk
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