‘Local Jobs For Local People’
The Employers Forum
New retirement regime for employers
Employers will need to become accommodated with the forthcoming abolition of the default retirement age and statutory retirement procedures and also to consider carefully any compulsory retirement age which is currently in place.
Current Law
Businesses should now be used to operating the current retirement provisions. These are an exception to age discrimination. Dismissal of an employee at or over the age of 65 is not unlawful age discrimination if the reason for the dismissal is retirement and the correct procedures are followed. This is the procedure whereby an employer notifies an employee of their intended retirement date and considers any request by the employee not to be retired. The appropriate written notice of the intended retirement date has to be given. If notice is not given the dismissal is deemed not to be by reason of retirement and the Equality Act 2010 defence to discrimination will fail.
The default retirement age is due to be phased out from April 2011. There will be transitional arrangements from 6 April 2011 leading to the abolition of the default retirement age and statutory retirement procedures by 1 October 2011.
Employers giving notice of retirement after 6 April 2011 will no longer be able to rely on the default retirement age.
After the 6 April 2011 employers can still compulsorily retire an individual, providing that they can objectively justify retirement as a proportionate means of achieving a legitimate aim.
HR Managers and Employment Lawyers are watching closely for the final legislation likely to be published within the next few months.
The new retirement procedures
The Government’s proposals call these “employer justified retirement ages” (EJRA’s). Employers can also stop using a compulsory retirement age with individual retirements decided on a case by case basis. A fair procedure will have to be followed.
The key issue for HR Managers is that for compulsory retirement the employer must be able to show that it is a proportionate means of achieving a legitimate aim.
What Employers Will Need to Consider
“Legitimate Aim”
This could be economic factors i.e. running a business efficiently. It could be health, welfare and safety of individuals or a particular requirement of the job. It is clear from case law that saving money by getting rid of older workers who might have built up a higher salary (for example than a younger worker doing the same or similar job) is not by itself legitimate aim.
“Proportionate” means that the means of achieving the legitimate aim must actually achieve it or significantly achieve it; the employer should have considered thoroughly reasonable alternatives and should have no reasonable alternative to the action it takes and the discriminatory effect should be significantly outweighed by the importance and benefits of the legitimate aim.
HR Managers and Employment Lawyers are watching closely for the final legislation likely to be published within the next few months.
The new retirement procedures
The Government’s proposals call these “employer justified retirement ages” (EJRA’s). Employers can also stop using a compulsory retirement age with individual retirements decided on a case by case basis. A fair procedure will have to be followed.
The key issue for HR Managers is that for compulsory retirement the employer must be able to show that it is a proportionate means of achieving a legitimate aim.
What Employers Will Need to Consider
“Legitimate Aim”
This could be economic factors i.e. running a business efficiently. It could be health, welfare and safety of individuals or a particular requirement of the job. It is clear from case law that saving money by getting rid of older workers who might have built up a higher salary (for example than a younger worker doing the same or similar job) is not by itself legitimate aim.
“Proportionate” means that the means of achieving the legitimate aim must actually achieve it or significantly achieve it; the employer should have considered thoroughly reasonable alternatives and should have no reasonable alternative to the action it takes and the discriminatory effect should be significantly outweighed by the importance and benefits of the legitimate aim.
Fundamentally, employers absolutely cannot rely on any preconceived or general assumption about older workers and retirement ages. Specific and valid evidence has to be obtained.
The Employment Team at Wake Smith and Tofields can give you practical and up to date advice on the abolition of the default retirement age and adopting a fair process from 6th April 2011. In particular we can work with you, based upon your particular business and using our knowledge of guidance and case law on the issues of legitimate aim and proportionate means to help you arrive at a compulsory retirement age which is evidenced by the particular requirements of your business.
For further information and advice please contact a member of the Employment Team at Wake Smith & Tofields on 0114 266 6660.
Glenn Jaques is a Director of the Employers Forum and a Partner at Wake Smith & Tofields Solicitors.
For further information and advice please contact a member of the Employment Team at Wake Smith & Tofields on 0114 266 6660.
Glenn Jaques is a Director of the Employers Forum and a Partner at Wake Smith & Tofields Solicitors.
