The Government has announced that it will remove the Default Retirement Age (DFA) of 65 permitted by the Employment Equality (Age) Regulations 2006. It proposes to begin phasing out the DRA from April 2011. The proposals are subject to a consultation, which will run until 21 October 2010. The new plans allow for a six-month transition from the existing Regulations, following the announcement in the Budget that the DRA would be phased out from April 2011. Currently employers can force staff to retire at the age of 65 regardless of their circumstances. The key proposals are:
retirements under the DRA will cease completely on 1 October 2011 and no new notices of intended retirement may be issued after 6 April 2011 .
retirement dismissals will still be permissible after 1 October 2011, but only if objectively justified.
transitional arrangements will apply to retirements that have been notified before 6 April 2011 to take effect before 1 October 2011. Retirements notified before 6 April, but intended to take effect after 1 October, will not be valid (unless objectively justified).
the procedural requirements applicable to a retirement dismissal, i.e. notification letter, meetings to consider and appeals etc and currently set out in Regulations, will be abolished.
The consultation paper recognises that Employers and Employees may want to talk about retirement plans but we simply do not know as yet what will be considered to be ‘objective justification’ for a retirement dismissal. As employers almost certainly will not be able to issue any notification of compulsory retirement to staff under the existing DRA regulations after 6 April 2011, then serious consideration should be given to employees coming up for retirement or who are already over retirement age.
To justify a compulsory retirement age, the employer would have to be able to show that it is a proportionate means of achieving a legitimate aim means that:
what the employer is doing is actually achieving its aim;
the discriminatory effect should be significantly outweighed by the importance and benefits of the legitimate aim; and
the employer should have no reasonable alternative to the action that it is taking.
A legitimate aim could be:
economic factors such as the needs of and the efficiency of running a business;
the health, welfare and safety of the individual (including protection of young people or older workers); or
the particular training requirements of the job.
The aim of saving money by dismissing older workers (who might be paid more than a younger worker for doing the same job) is certainly not in law a legitimate aim.
Employers will also not be able to rely on generalised i.e. ageist assumptions that lack a solid foundation as sufficient evidence of justification. Most employers currently have a compulsory retirement age of 65 which they have not had to justify up to now and there few cases considering how specific employers can objectively justify retirement. A very recent Court of Appeal case provides employers with some indication of what might constitute objective justification. In a law firm which forced partners to retire, the Court of Appeal said that it could be a legitimate aim to avoid forcing an assessment of a persons falling off in performance, thus maintaining a confrontation-free workplace. The Employment Appeal Tribunal in the same case had already agreed that two legitimate aims were ensuring that solicitors in the practice had the opportunity to become a partner after a reasonable period and facilitating the workforce planning in the partnership.
Once the consultation phase is over and the Government publishes more detailed plans about exactly how it intends to proceed on this matter we will let you know what we recommend.
