UK: Retiring The Retirement Age?

This article is the copyright of Bond Pearce LLP, 2007

Out of the three new fields of discrimination outlawed since 2003, age was always going to be the most challenging one to implement. As with sexual orientation and religion or belief discrimination, age discrimination derives from the European Union under the Framework Directive.

Since the implementation of the Employment Equality (Age) Regulations 2006 (Age Regulations) on 1 October 2006, various reports have been produced, looking at implications of the Age Regulations. As we have reported previously, Heyday has also challenged the UK's implementation of the Framework Directive in the Age Regulations and in particular the validity of the default retirement age. This week's briefing considers the implications the Heyday challenge is having on age discrimination cases currently in front of the Employment Tribunal and also looks at the latest reports on age discrimination to be published.

Johns v Solent SD Ltd

Following on from Heyday's challenge, some employees who are being compulsorily retired are bringing claims for age discrimination and unfair dismissal on the grounds that the default retirement age is not a valid ground for dismissal. Such claims are being brought now so that the employee does not fall foul of the time limits. However, employees are also requesting that such claims be stayed (ie being put on hold) pending the outcome of the Heyday Challenge.

Mrs Johns (J) was dismissed by Solent SD Ltd (SSD) at the age of 65. J accepted that SSD had correctly followed the retirement procedure and that she was dismissed for retirement, a potentially fair reason, but brought claims for unfair dismissal and age discrimination. SSD applied to have them struck out and J applied for a stay of proceedings pending the outcome of the Heyday case. She argued that if the challenge was successful, her claims would have a good prospect of success.

J's application for a stay was dismissed and her claims struck out. In reaching his decision Chairman pointed to two factors:

1. The recent Spanish case of Felix Palacios de la Villa v Cortefiel Services SA where the Advocate General to the ECJ has recommended there that the ECJ find the Directive does not preclude national laws setting retirement ages. Whilst the ECJ is not bound to follow the Advocate General's opinion, the Chairman thought the Advocate General's opinion was well argued.
2. The Heyday challenge was unlikely to be heard until at least 2009 which was a long time to wait for a decision.

Along with this and the similarities between Heyday's case and Palacios, the Chairman concluded the prospects of J's case being successful were remote. The Tribunal therefore concluded that the prejudice to SSD in the proceedings being stayed for an indefinite period of time outweighed the prejudice to J in having a claim struck out which only had a remote prospect of success.

Report on managing without a retirement age

Adding to the debate on retirement ages is one of the latest reports to be published. The end of the line for retirement ages is by the Employers Forum on Age (EFA) and sets out the business case for managing without a retirement age altogether.

The report argues that the default age and retirement process appears to have created more problems for employers than it has solved and led to general confusion amongst both employers and employees. The EFA considers there is an air of unsustainability around the default age, with the Government's promised review in 2011 and the Minister responsible at the time for the implementation of the Age Regulations stating "the set retirement age would act as a comfort blanket for employers and employees during the period of culture change triggered by the legislation".

The EFA report sets out how employers who chose not to enforce a fixed retirement age are happy with their decisions and sets out a number of business drivers encouraging the abolishment of a set retirement age.

The report also highlights a number of benefits the EFA claims to stem from having no set retirement age. In support, a number of success stories are set out from big multinational companies, including B&Q and the Co-operative Group who, in removing a compulsory retirement age, say they have overcome a number of problems and reaped the rewards.

CIPD Report

The Chartered Institute of Personnel and Development (CIPD) has also recently published the first in a series of guides on the effects of age discrimination, this time looking at the other end of the employment relationship: recruitment. The guide aims to assist employers in overcoming the challenges posed by seeking to avoid age discrimination in recruitment. It seeks to do this by providing practical guidance and real-life case studies from organisations such as Royal Mail, HSBC and Marks & Spencer on a range of issues from advertising to selection and covers tricky areas such as graduate recruitment. It also advocates employers monitor their procedures to measure the diversity of the process.

The guide stresses that being positive about age is about building an effective workforce from different ages and states that businesses of all sizes are reporting the benefits of employing an age diverse workforce; namely a higher retention rate, lower absenteeism, increased motivation, greater flexibility and wider pool of skills.

Conclusions

The case and reports highlight that age discrimination was a hot topic before its implementation last October and will continue to be so for the foreseeable future. It is unique in discrimination as, whilst everyone is of a particular age today, as we are a particular ethnic background, we will not be of the same age tomorrow but we will be of the same ethnic background.

The decision in Johns is an important one for employers - although it is not binding as it is only the decision of an Employment Tribunal. Nevertheless it presents employers with a strong argument against employees who wish to bring claims based on the retirement age. Provided employers comply with the retirement provisions, this Tribunal decision provides some hope that anyone bringing such a claim will have it struck out.

The EFA report is interesting for those employers who are nevertheless considering getting rid of retirement ages altogether. Whilst many employers may want to wait and see the outcome of both the Heyday challenge and the Government's review in 2011, some may want to explore this avenue now.

The CIPD guide provides some useful guidance and highlights that its latest Recruitment, Retention and Turnover survey showed that only 29% of organisations had looked at the recruitment policies and practices in the light of the age discrimination legislation. Employers should ensure that their policies and procedures have been reviewed and are compliant with the legislation.

As both the EFA report and the CIPD guide note ensuring an age diverse workforce is also politically driven because of the UK's changing demographics. The EFA gives the long term forecast as 54.7% of the population will be over 65 by 2050. The CIPD demographic forecast suggests that by 2009 those aged 20-29 will have fallen by 9 million in comparison with 1999 and those between 50 and 64 will have risen by 6.5million, 5.5million in the 50-59 age range.

Consequently there is both a legal imperative and commercial imperative for employers to take age discrimination seriously.

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