On 6 April 2011 the default retirement age of 65 was abolished. This means that employers can no longer simply retire an employee on the basis that they have reached the age of 65.
What does the law say?
Unless employees who are already 65 or over or who will be 65 on or before 6 October 2011 have been given the requisite notice before 6 April 2011, it will be unlawful for employers to retire those employees for reaching the default retirement age of 65.
The law refers to ‘transitional provisions’, which mean that certain retirements will still be lawful, but the conditions of this are that (i) that the notice of intended retirement has to be issued on or before 5 April 2011, (ii) the employee to be retired has to have reached the age of 65 on or by 30 September 2011 and (iii) the statutory retirement procedure needs to have been followed.
What is ‘objective justification’?
Employers intending to retire an employee must be able to justify the reason for the retirement. Potential reasons would be succession planning or for health & safety reasons. The downside of getting rid of the default retirement age is that employers may well need to turn more to capability procedures when considering how to fairly dismiss employees who might not be able to carry out their role.
What does this mean for in practice for employers?
For employers it means that there is a risk that any dismissals made from 6 April 2011 onwards will constitute direct age discrimination under the Equality Act 2010 (EqA 2010).
This essentially means that where employers have given correct notification to employees due to turn 65 or who are already 65 within 6 months from 6 April 2011, the transitional provisions will apply.
During the last three years of the current recession the Employment Tribunals have seen a huge increase in claims to the Tribunal for unfair dismissal arising out of redundancy. No doubt the statistics are largely attributable to the economic climate and the sheer numbers of redundancies that businesses have had to make, however, more employees are aware of their rights and there is also an increase of “no win no fee” businesses offering to conduct Tribunal claims for dismissed employees. It is likely that there will be a rise in age discrimination claims brought to Tribunal.
How can employers try to safeguard against potential Employment Tribunal claims?
With a growing awareness and increased claims culture, it is even more important for employers to have really good Human Resource management systems in place. Simply put - aggrieved employees bring claims. Employees handled well are less likely to bring a claim.
Many claims can be avoided by ensuring that the policies and procedures in place specifically relating to retirement, but also in all HR related general, are followed correctly and explained clearly.
What should employers do now?
It would be good practice to write to all your employees to inform them of how you intend to deal with retirement in the absence of the default retirement age. Employers may decide to amend employees’ contracts of employment to change the wording relating to retirement. Remember that the usual provisions in relation to changing contract terms will apply and employees will need to consent to any variations in writing. No doubt the retirement policy in the staff handbook will also have to be amended.
Other implications to consider : as a result of the change to the law on retirement, employers are allowed to withdraw or not to offer insured benefits to employees who are aged 65 or over.
Got a question about retirement or any other HR query?
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