Default Retirement Age abolished - 6 April 2011
6 April 2011 – default retirement age abolished - Revised draft Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011
From 6 April 2011 retirement age is to be abolished and if an employee is dismissed because of age, they will be entitled to claim direct discrimination unless the dismissal can be objectively justified by the employer. They may also claim unfair dismissal. This is as a result of draft Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 which come into effect on 6 April 2011.
The current law allows an employer to retire an employee at 65 or over provided the employer gives the employee notice of retirement of between 6 and 12 months and follows the statutory retirement procedure. Under the transitional arrangements, the last day which an employer can give notice of retirement under the current law is 5 April 2011, provided that the employee reaches the age of 65 by 30 September 2011.
After 6 April 2011, employers have two options: abandon fixed retirement ages altogether or retain a fixed retirement age. If fixed retirement ages are to be retained, the employer will need to be able to justify the retirement age. If fixed retirement ages are abandoned, the employer will need to show, on a case-by-case basis, that it acted fairly when deciding to dismiss and that such dismissals were not tainted with age discrimination.
Action points for employers:
- Identify any imminent retirements and whether they are validly covered by the default retirement procedure, given the phase-out and transitional provisions.
- Mark 5 April 2011 in the diary as the last day on which notices of dismissals under the default retirement procedure may be issued.
- If any retirements that have been planned or set in motion fall outside the default retirement procedure, these will have to be revisited.
- Any promotions which have been planned on the back of retirements will also have to be considered afresh.
Retirement age in contractual documents
- If a fixed retirement age is being abandoned, remove this from the contract of employment and notify staff of the change. Where the contract of employment is stated to terminate automatically on the person reaching the fixed retirement age, the employer should seek a variation of the contract which requires the employee to give the usual notice if they are resigning for retirement.
- If a fixed retirement age is being retained or revised upwards, consider what objective justification there is for this.
- Update policies.
- Review share scheme and any associated documents and consider whether the "good leaver" and "bad leaver" provisions need amending.
- Consistently apply appraisals and performance management procedures across the whole organisation, regardless of age, to avoid criticism that older workers are being targeted.
- Build discussions about future aspirations and plans into the appraisal process so that such discussions are not focused on people in a certain age group.
Consider the whole of the recruitment cycle
The above changes should be considered in the context of the whole recruitment cycle, not just in so far as they affect the dismissal of older workers.
Recruitment. – Employer cannot automatically refuse to consider applicants if and because they are within 6 months of their 65th birthday, as allowed under the current law. Employers will have to be able to objectively justify refusal based on age.
Provision of benefits – Note that it will not be discriminatory to withdraw or withhold certain benefits to employees aged 65 or over, such as life assurance, PHI or medical insurance. The government will make an exemption in relation to these.
Please contact us if you would like any assistance or advice in respect of the new retirement provisions and how they affect your business and employees. We can also assist you in updating your contracts and policies.
The 8th Hart Brown Annual Economic Forum
Thursday 21 June 2012
Dr Martin Weale CBE, Justin Urquhart Stewart and Alan McClafferty
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