Age discrimination: Retirement

The Retirement provisions of the Employment Equality (Age) Regulations 2006 are likely to have the biggest impact on employers.

At present employers can force employees to retire at any retirement age, which has been specified in their contract. There is no general protection from age discrimination and as long as the specified age is the normal retirement date of the employer, there is no unfair dismissal case to answer. That is going to change from 1^st October.

To access the full article on the impact of the new Age discrimination regulations on retirement, Please see below:

The underlying European Directive, which is being implemented by the new regulations, permits age discrimination if it is objectively and reasonably justified by a legitimate aim. After much consultation the UK Government decided that a national default retirement age of 65 is justified. It has therefore included a specific exception from the general rules of unlawful age discrimination for retirement at or above that age (Reg 30). This means that dismissal by reason of retirement when the person is at or over the age of 65 will be lawful, provided certain conditions are satisfied. Employers who have retirement ages below 65 will now need to examine them very carefully. Although it may be theoretically possible to justify a lower retirement age than 65, this is bound to be difficult and will only apply in limited circumstances.

Employers are not however free of problems just because their normal retirement age is already at or above 65. Retirement will now be classed as another potentially fair reason for dismissal. But employers will not have to "prove" retirement in the same way as they have to prove redundancy, for example. All employers have to do is prove the termination date is the agreed retirement date and that they have followed the new retirement process laid down in the Regulations.

Schedule 6 introduces a "Duty to consider working beyond retirement". This means that employers will have a duty to notify their employees of impending retirement no more than 12 months (and no less than 6 months) before the intended date of retirement. Employers will also have a duty to notify these employees that they have the right to apply to continue working beyond the retirement age. If employers do not notify their employees in accordance with the new rules at least 6 months before the intended date of retirement they may have to pay a penalty of up to 8 week’s capped pay. If they fail to make the notification at all, or only give it within two weeks of the date of intended retirement, then the eventual "retirement" will constitute an automatic unfair dismissal.

Employees who want to continue working beyond retirement must make their request in writing at least 3 months (but not more than 6 months) before the intended retirement date. The process is similar to the process for requesting flexible working. The employer must hold a meeting to discuss the request with the employee within a reasonable time and must give the employee notice of his decision as soon as is reasonably practicable after the date of the meeting. There is a right to be accompanied and an employee can appeal the decision.

Transitional provisions apply to retirements between 1^st October 2006 and 31^st March 2007. (Please click here to view a PDF version of our note on Transitional provisions in a new window)

The big change for employers is that they will now have to manage the retirement process actively and carefully. Forward planning and clear communication will be vital to ensure that retirements do not result in unfair dismissal or age discrimination claims.

For full listings on our Age discrimination series, please Click here

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

The original publication date for this article was 17/05/2006.