UK: New Retirement Procedures

The major change which will affect every employer in the country is the need to introduce new procedures on retirement. Sejal Raja explains.

The Regulations will not only prevent discrimination occuring in the workplace, but will also make specific changes to the law on unfair dismissal. In summary, the changes are as follows:-

• Allow those over age 65 to claim unfair dismissal;

• Entitle employees over age 65 to redundancy payments;

• Create a new fair reason for dismissal on grounds of retirement - provided procedures are properly followed.

The Regulations set out a specific procedure to be followed to dismiss an employee, even though the retirement date was agreed in the original contract of employment. Provided that this procedure is properly followed, a dismissal on the grounds of retirement will be fair even though the real reason for the dismissal may be on grounds of performance or redundancy. The procedure must be followed if the risk of unfair dismissal or redundancy claims is to be avoided.

Between 6 months and 12 months before the intended retirement date, you should write to the employee, informing him that you are intending to retire him on his 65th birthday. In the same letter, you should notify the employee that he can request to work beyond retirement date and that you will consider that request.

Step 2

The employee, if he wishes you to consider a request to work beyond retirement date, should write to you three months prior to the intended date of dismissal, setting out the fact that he would like to work beyond retirement date and whether he would like his employment to continue indefinitely; until a specified date; or for a specified period.

Step 3

If you receive such a request, then you have a duty to have a meeting with the employee to consider that request. The employee should be allowed to be accompanied by a fellow colleague. You should bear in mind that the right does not include a trade union representative unless the trade union representative is a work colleague.

Step 4

Once you have reached your decision, you need to notify the employee in writing. If your decision is not to agree to the request to work beyond retirement age, then the employee is entitled to appeal that decision. The appeal should be to somebody different from the person who heard the original request.

If you fail to notify the employee within the timescale provided in the Regulations, i.e. between 6 and 12 months prior to the intended retirement date, then you could be liable to pay compensation to the employee of up to 8 weeks’ pay which is capped, currently at £290 per week. If, however, you have a retirement policy which sets out the procedure and clearly states employees’ right to request to work beyond retirement age, then as an employer you could argue that compensation should be reduced as the employee was aware of his right to request to work beyond the retirement age.

The duty to notify nevertheless continues up until two weeks prior to the intended retirement date. If you fail to notify the employee within this timeframe, i.e. by two weeks before the retirement date, the dismissal will be automatically unfair.

The dismissal will also be automatically unfair if you fail to consider a request made by an employee to work beyond retirement date or if you fail to consider an appeal against a decision.

There are complicated transitional provisions which apply to proposed recruitments between 1 October 2006 and April 2007. You should notify the employee of his or her request to work beyond retirement age as soon as reasonably possible.

© RadcliffesLeBrasseur

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.