Since 1 October 2006, it has been unlawful to discriminate against an employee on grounds of age unless an employer can establish that discrimination was objectively justified i.e. the act of discrimination was for reasons which were a proportionate means of achieving a legitimate aim.
This legislation, however, also made it permissible for employers to dismiss an employee at or over the age of 65 on grounds of retirement. A formal procedure (“the retirement procedure”) was laid down requiring the employee to be issued with a notice of intention to retire in advance of the retirement date. If the retirement procedure was followed to the letter, then dismissal would be fair and non-discriminatory.
This was subject to a legal challenge by the Hayday Organisation (part of Age Concern) on grounds that this process was unfair to older workers. These challenges led to the government announcement earlier this year that these compulsory retirements would be abolished as of 1 October 2011, and as a result, no new notifications of intention to retire could be issued as of 6 April 2011.
It remains possible, for the moment, for an employer to retire an employee using the retirement procedure. Draft regulations published earlier this month set out the circumstances in which an employer can still require an employee to retire. The following conditions need to be in place:
(a) notice of intention to retire must be issued by 5 April 2011;
(b) the employee has reached or will reach 65 by 30 September 2011; and
(c) the retirement procedure must be followed correctly and any request to continue in employment needs to be given proper consideration. (Please note, the short notice provisions allowing employers to give two weeks’ notice will be repealed as of 6 April 2011).
Where employer and employee have agreed an indefinite or fixed period of employment of more than six months, the employer will have to issue a fresh notice and initiate the retirement procedure again if it intends to bring employment to an end. As this will not be permitted after 5 April 2011, this means that the last retirements under the retirement procedure and the transitional provisions will be October 2012. (There has been much debate as to when the correct longstop date falls. The Department for Business, Innovation & Skills state that the final date is 5 October 2012, but a difference of opinion remains).
Alternatively, if the employer has agreed to an extension of six months or less, the retirement can go ahead under the retirement procedure at the end of that period, without the employer having to repeat the retirement procedure.
If you are considering retiring an employee, then the first step is to ensure that the notice of intention to retire is correctly issued before 6 April 2011. If you have any concerns about how this change affects you please contact Rachel Billen on 01392 278 381.
Coming soon – Part II of this article Retiring Employees – the law as of 6th April 2011.
This Employment Law Newsflash does not constitute legal or other professional advice and should not be relied on as such. You should take specific advice regarding your circumstances before taking any action based on the information contained above.