Abolition of retirement age is imminent

On 3 July 2006, Heyday, an organisation closely associated with Age Concern, made an application to the High Court seeking a judicial review of the Employment Equality (Age) Regulations and, in particular, challenged the government over employment rights for people over the age of 65. The basis of the challenge is that the regulations as drafted contravene the relevant EU directive, in that employees aged 65 or over will not have a right to continue to work beyond the age of 65 years because employers will be able to effect a planned retirement.

Right to retire

Regulation 29 allows employers to retire employees at 65 years and retain employees beyond 65 years. This will not prejudice the employer’s right to retire employees after the normal retirement age has passed through planned retirement. So, dismissal on grounds of retirement of those staff aged 65 years or over will not be regarded as age discrimination or unfair if the correct procedure is followed.

A planned retirement dismissal will normally be fair on the grounds of retirement when it takes place after the employer has informed the employee of the proposed retirement date, at least six months in advance, and considered any request by the employee to work beyond the normal retirement age.

Contrary concept

This would appear to be contrary to the government’s stated aim of encouraging employers and employees to extend working life beyond the default retirement age and the EC directive.

At the first stage of the application, Heyday will need to convince a High Court judge that it has an arguable case to proceed to a full court hearing. The government will have 21 days to respond to the challenge.

It is difficult to see how a judge, at this stage, will refuse a full hearing, since the regulations will permit forced retirement at the age of 65 years or over without any justification on the part of the employer, which, on the face of it, is discrimination on the grounds of age – the very concept that this legislation was introduced to prevent. However, this legal challenge is very late in the day.

Employers must take care since any full hearing of the challenge is not likely to come before the courts until the autumn – after the regulations have been introduced on 1 October 2006. This, in itself, causes problems for employers who have set a retirement age of 65 years (and who have already notified their staff of the proposed retirement date and will be considering requests by employees to work beyond 65 years) if part of the regulations are deemed unlawful and have to be later amended. Any claim for discrimination in employment law is unlimited and not subject to a statutory cap.

Abolition drive

The current challenge apparently seeks to abolish a national retirement age of 65 years, at which employees can be considered for retirement on the basis that employers can still dismiss staff on the grounds of performance and capability.

To avoid expensive claims from employees brought on the grounds of age discrimination, employers will need to ensure that performance management policies are updated, are in place and addressed. If issues arise in relation to performance or capability, employers should follow the statutory dismissal procedure before 1 October 2006 and eliminate any claims based upon age.

After 1 October 2006, and until the outcome of the challenge is known, employers should consider dismissing on other permissible grounds, such as performance, capability or redundancy (assuming that selection is not based on age) rather than retirement.

Michael Delaney, partner, Matthew Amold & Baldwin

Key points

  • Dismissal by means of retirement will be fair if it takes effect at or over 65 years; or

  1. Retirement takes effect at the employer’s normal retirement age (which must be justified if less than 65 years), and
  2. the employer has informed the employee not less than six months before the retirement date and notified them of their right to request to stay on beyond retirement, and the employer has considered the request.

  • Dismissal before an employer’s normal retirement age cannot be by reason of retirement.

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