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Employment law: Retiring staff who are 65 and over

Jean Sapeta explains where employers stand on retirement issues following changes to age discrimination laws.

The rules governing retirement at aged 65 have all changed (Photograph: istockphoto.com / Matt Jeacock)
The rules governing retirement at aged 65 have all changed (Photograph: istockphoto.com / Matt Jeacock)

It is 'all change' for employees and compulsory retirement.

In July 2010, the government announced it would abolish the compulsory retirement provisions from 1 October 2011 and it has been illegal for employers to serve notifications of 'intention to retire' since 6 April 2011.

Age discrimination
Between 1 October 2006 and 5 April 2011, compulsorily retiring an employee on or after their 65th birthday did not count as age discrimination if the employer gave the individual six months' notice of the intention to retire and considered any requests to continue working. That simple regime is disappearing.

Dismissing an employee on or after 6 April 2011 on the grounds that they have reached retirement age will be age discrimination, unless the retirement can be justified.

The dismissal will also be unfair unless there is a substantial reason (legitimate aim justifying dismissal) and the transitional provisions in the Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 apply.

Transitional rules
These transitional provisions are complicated. In outline, employees can be lawfully retired provided that notice of intention to retire was given by 5 April 2011, and the employee will be aged 65 by 30 September 2011. An employee can exercise their right to request working beyond retirement if they have been given 12 months' notice of intention to retire by 5 April 2011.

The last possible date for retirement of an employee under the existing law seems to be 3 October 2012 (although there is disagreement over this due to how the transitional regulations were drafted).

That date would apply to an employee who was given 12 months of intention to retire on 5 April 2011 (the last possible date) - taking the employee to 4 April 2012 - and the employee was then given a maximum six months' agreed extension.

Legitimate aims
Partners - who are not employees - have always been outside the compulsory retirement age provisions. They cannot be forced to retire unless a compulsory retirement is a proportionate means of achieving a 'legitimate aim'.

Government publications have commented that justifying a fixed retirement age after October 2010 will not be easy.

Various 'legitimate aims' for fair dismissal of older employees were canvassed: the need to promote recruitment and retention; providing a clearly defined career path for younger workers; limiting the need to dismiss based on diminishing performance; allowing people to retire with dignity; facilitating long-term employment planning and potentially, the extra cost of older workers.

Safest options
However, commentators have suggested that the safest option for employers is to explore alternatives to compulsory retirement for legitimate aims. These include changed working patterns, roles and responsibility and allowing someone to take on a less demanding role.

The usual reasons for fair dismissal of an employee continue to apply: poor performance, poor behaviour, ill health and 'some other substantial reason', such as organisational change.

The regulations do not forbid an employer or partners from discussing with the employee their personal plans for the future. An agreed way forward is probably the best way to avoid costly claims in the future.

  • Jean Sapeta is a partner and head of employment at solicitors Hempsons

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