Retirement
Before the Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 came into effect on 6 April 2011 employers could force compulsory retirement on their employees when they reached the age of 65 (Default Retirement Age)
Since the 6 April 2011 the only way that individual employers can impose a compulsory retirement age is where it can be “objectively justified” in their particular circumstances. This is a process so fraught with difficulties and uncertainties that no employer should contemplate introducing it without first taking professional advice. Getting it wrong could result in claims for unfair dismissal and age discrimination.
What the employer would need to do to justify a compulsory retirement age in his particular business is show that it meets a legitimate aim and that it is a proportionate means of achieving that aim. The legislation does not interpret these matters and they will only become clearer as cases are decided by the Courts and Tribunals. Remember the test is an objective, not subjective, one.
In the vast majority of cases employees will be entitled to remain in their job for as long as they wish provided they are capable of doing it to the appropriate standard and their health or conduct does not give legitimate cause for dismissal.
ACAS points out that now more than ever it is important for employers to ensure that capability procedures and policies are fit for purpose, legally compatable and applied fairly and consistently to employees of any age. The ACAS advice booklet “How to manage performance” can be downloaded, free of charge, from its website www.acas.org.uk/performance.
A fair and effective appraisal system can be of considerable benefit to employers in assessing employees’ capability. Some employers initiate capability assessments as part of the annual appraisal and if this is done it must be for all employees, of whatever age, and handled sensitively. ACAS has published “Managing performance and appraisals” which can be downloaded from its website.
For small organisations it may not be appropriate to operate a formal appraisal system in which event management should talk regularly to all employees, of whatever age, about their performance, development or training needs and aims and aspirations. A note of relevant talks should be made and agreed with employees.
If an employee, of whatever age, is performing poorly then the employer should try to establish the reason for the deterioration, develop an improvement programme, including training, and monitor the employee’s progress before contemplating the possibility of dismissal.
It must be remembered that what we are primarily looking at is age discrimination. If employers discriminate against older workers by not giving them the same opportunities as other workers or dismiss them because they have reached a certain age then they will be liable for unlimited compensation.
However, it is not just age discrimination but potentially disability discrimination as well in certain situations. For example, in considering dismissal of an older worker for lack of capability the cause of the incapability needs to be established and if that cause could be a disability within the meaning of the Equality Act then reasonable adjustments should be made to keep the employee in work.
There will be occasions where employees want to retire but the employer would like them to stay on. In such cases the employees might be persuaded that flexible hours, part time work or other incentives make it worthwhile for them to continue.
If as an employer you see it as part of your role to offer counselling for retirement to your employees it is important that you do not engage in specific retirement discussions that could be construed as discriminatory for trying to get an older worker to retire. Similarly care must be taken to ensure that your line managers cannot be accused of any such discrimination. Within company policy on retirement employees should be reminded of the grievance procedure available to them if they consider they are the victims of age discrimination in the same way as any other form of discrimination.
The legislation does not effect the age at which individuals can claim the state pension. In 2020 the State Pension Age (SPA) will rise for both men and women to 66 years.
The 2011 Regulations enable employers to cease to provide or offer group risk insured benefits to employees aged 65 or over even if they continue working. The age at which these benefits can be withdrawn will increase in line with increases to State Pension Age.
All PBS Information sheets are designed to provide the detail you need to implement best business and employment practices. They are not a detailed commentary on the current law and where advice is needed for a specific case you should contact PBS for expert consultation.