The so-called ‘default retirement age’ (DRA) is to go from 1st October 2011. The DRA allowed employers compulsorily and fairly to dismiss someone at age 65 or over and avoid any liability for age discrimination and unfair dismissal.
From October this will not be permitted, unless it can be ‘objective justified’, a test which the ACAS Guidelines (published on 31st January) say ‘is not an easy one to pass and it will be necessary to provide evidence if challenged; assertions alone will not be enough’.
A careful reading of the ACAS Guidelines indicates that, unless employers tread carefully, there is likely to be a big increase in age discrimination and unfair dismissal claims, from younger as well as older employees. The Guidelines:
- Encourage employers to discuss employee’s retirement plans with them, but emphasise that such forward-planning should not just be focussed on older employees; to do so, they imply, could constitute age discrimination. To avoid that risk, discussions about future plans should ideally take place with all employees and only in the most general, open way without implying any pressure e.g. avoid the direct question ‘when are you retiring/leaving’? Any perceived ‘pressure’ to resign may well constitute grounds for a discrimination claim and a constructive dismissal claim.
- Point out that even if an employee indicates that they will retire at a particular date, they can change their mind at any time up to the point at which they formally resign. So there will be arguments about what constitutes a resignation and ‘did (s)he actually resign’.
- Emphasise the need for robust performance and capability management processes, but again the need to avoid age discrimination by being consistent across all age groups. This works both ways: don’t focus your capability assessments on just the older staff; but equally don’t tolerate lower standards from your older staff for fear of accusations of age discrimination from the younger ones. To complicate things, however, the Guidelines acknowledge that various disabilities tend to increase with age, so remind us that ‘reasonable adjustments’ (e.g. to performance standards) might need to be made for some older people!
- Permit the removal of insurance-based benefits from older people once they reach the state pension age for men (currently age 65, but from 2018 being phased up to 66 by 2020).
- Point out that contractual agreements with employees specifying a particular retirement age are perfectly permissible, but are ‘unlikely to have any legal force’ – so why have them?
The Guidelines also cover the transitional arrangements through to 1st October, the key points of which are:
- The minimum 6 months’ notice of retirement at 65 or above under current arrangements must be issued on or before 30th March 2011 and only if the employee is actually 65 or over before 1st October.
- To qualify that rule, shorter notice can be given of a retirement to take place before 1st October, but that will only be allowed until 5th April 2011 and then the employee can claim compensation of up to 8 weeks’ pay – civil servants seem to love complicating things!
- Under current arrangements up to 12 months’ notice has been permissible. If notice has already been given for retirement to take place after 1st October 2011, that retirement can no longer be enforced against an employee’s wishes, unless it can be ‘objectively justified’ (that ‘hard test’ again).
Good luck with all that! Let me know if you need help.
