Dismissal

by Kate Russell

Retirement

The default retirement age was removed October 2011. The rules relating to the default retirement age and the associated statutory retirement procedure were repealed with effect from 6 April 2011 and the general rule is that employers can no longer issue new notifications of retirement.

Employers will still be able to operate a compulsory retirement age, provided that they can objectively justify it. The Government’s proposals call these ‘employer-justified retirement ages’ (EJRAs). To justify a compulsory retirement age, the employer must be able to show that it is a proportionate means of achieving a legitimate aim.

This is likely to be a very high bar for employers to meet. The aim of saving money by getting rid of older workers (who might, for example, be paid more than a younger worker) is not by itself a legitimate aim.

Employers will not be able to rely on generalised assumptions. They will have to provide precise and objective evidence if their retirement ages are challenged.

Once the statutory retirement procedure has been abolished, if an employer wishes to dismiss an employee it will have to be able to show that it is for one of the potentially five fair reasons for dismissal (capability, conduct, redundancy, illegality or some other substantial reason).

Each employer should work out when its employees are going to retire and how the proposals affect retirements within its organisation. ACAS suggests that it may be appropriate to have discussions with employees (of all ages) about their future plans.

Employers risk claims of age discrimination and unfair dismissal from employees who have been compulsorily retired.

Direct and indirect age discrimination claims are likely to revolve around whether or not the employer was objectively justified in requiring the employee to retire.

With unfair dismissal claims involving retirement, the question will be whether or not the employer had a fair reason for dismissal and followed a fair procedure

If the work performance of an employee who is 65 on or after 1 October 2011 deteriorates, the employer should deal with the situation. It should follow a performance management procedure, issue the employee with warnings and give him the opportunity to improve, before considering whether or not to dismiss on capability grounds.

Following the abolition of the default retirement age, employees aged 65 or over who are absent because of long-term sickness will be subject to the employer’s normal sickness absence process. Employees who are over the age of 65 will be entitled to be paid sick pay in accordance with the employer’s usual contractual arrangements or statutory sick pay where the employer does not pay contractual sick pay.

There is an exemption in respect of group risk insured benefits such as income protection, life assurance and medical insurance. Employers may exclude employees from access to these benefits once they reach the age of 65, without it amounting to unlawful age discrimination. This age will increase in line with the state pension age.

Employers may need to adjust their recruitment practices, to ensure that the number of new employees recruited is proportionate to the number of retirements. Note that the former exemption from the age discrimination provisions that allowed employers to reject an applicant who has reached, or is within six months of reaching, the retirement age of 65 or older, ceased to apply from 6 April 2011.

It may be possible to have a protected conversation.