Retiring Employees In The New Age Of Discrimination Law

19 July 2006

On 1 October 2006, legislation outlawing age-based discrimination is to be implemented for the first time in the UK. In this second feature on the Employment Equality (Age) Regulations 2006, we look at how the principal proposals might affect employers’ when reaching decisions on their employees relating to retirement.

Default retirement age of 65

The new regulations will introduce a default retirement age of 65. Whilst an employer will still be able to retire an employee at an age below 65, this will only be possible if the employee has a normal retirement age below the age of 65 and that lower retirement age is objectively justified. Whilst many employers have previously operated a lower retirement age on the grounds, for example of health and safety, it is anticipated that in the future it will be difficult for employers to objectively justify a below 65 age. Therefore, most employers currently operating below 65 retirement ages will need to raise them to 65. This will not, of course, prevent an employee from requesting to retire at a lower age, particularly when benefiting from the terms of an occupational pension scheme with a below 65 benefit date. The Government will review the default retirement age in 2011; five years after implementation.

Duty to inform and consider

The regulations also introduce a prescribed procedure that employers must follow when dismissing an employee on the grounds of retirement. Failure to follow the procedure is likely to render the retirement dismissal unfair leading to claims for unfair dismissal.

In summary form; the procedure requires (1) the employer to notify the employee in writing between six and 12 months before the date of dismissal of their planned retirement date and the right to request not to retire (2) If the employee wishes to work beyond their planned retirement date, they must make this request in writing to the employer between three and six months before the planned retirement date. The request should state that the employment continue indefinitely, for a stated period or to a stated date (3) The request should be considered at a meeting between the employer and the employee (4) The employer’s decision should be given in writing. If the request is accepted in full or in part, the employer should state for what period the employment is extended. If the request is refused, the employer is under no legal obligation to give a reason, although employers must be careful not to fall foul of other forms of discrimination, for example disability, race or sex (5) The employee is given a right of appeal against the decision.

It is important to note that if the planned retirement date is extended, the employer will be required to follow the prescribed duty to inform and consider for the extended date.

There will also be transitional arrangements for employees who are to be dismissed on the grounds of retirement between 1 October 2006 and 31 March 2007.

For more information please contact Andrew Masters, Partner & Head of Employment.
 

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