Tayntons LLP, Employment Law Specialist comments on compulsory retirement options for Employers

17th January 2011 14:53

After 30th March this year employers will not be allowed to start the process for compulsory retirement for any employees under the old rules.  There will no longer be any legal support for compulsory retirement at age 65. 

 Employers will be faced with two choices.  Their first option is simply not to have any compulsory retirements at all.  Employees of those businesses will simply carry on working until they make their own decision to retire, or are dismissed for some other reason.

 The second option is for employers to impose a retirement date.  This could be age 65, or another age.  Any employer dismissing a member of staff for retirement will be taking the risk of claims for unfair dismissal and age discrimination. They must follow a fair procedure, giving notice of impending retirement, and holding a hearing to consider any request by the employee to stay on.

 The employer will also have to show that the retirement age is objectively justified.  They must be able to show that a real and legitimate business need is being met, that the retirement age they have chosen meets that aim and that it is proportionate to impose a retirement age.  This will include weighing the discriminatory effect for the employee against the business need and considering whether there are other ways to meet that need which are not discriminatory.

 We can learn some lessons from the old law, because employers wanting a compulsory retirement age below 65 have had to objectively justify this.  This included the emergency services, where there is a need for physical fitness, football referees and air traffic controllers.  Also partnerships (notably firms of solicitors) wanting to force partners to retire have had to objectively justify this.

 Justifications which the courts have upheld in the past for compulsory retirement have included workforce planning, having an age-balanced workforce, facilitating the recruitment and retention of younger employees, avoiding the cost of extending pensions and other benefits to older workers, protecting the dignity of older workforce by not requiring them to undergo performance management procedures and ensuring a high quality of service or ensuring continued competence. 

 Can these be taken as a safe guide for employers to follow now?  The short answer is no.  Some of these aims are arguably discriminatory in themselves, and there have been a number of conflicting decisions from the courts and employment tribunals. 

 The danger of the new rules is that neither employers nor employees can be certain if a particular business can satisfy the requirement to objectively justify a retirement age unless a claim has been taken to an employment tribunal, and by then, it’s too late.

 For further information contact Ian Pettifer on 01452 509080 or ian.pettifer@tayntons.co.uk