Employment law clinic No 17: The ageing workforce

The Challenge The new HR Manager of a Retail Company wants to dismiss three
employees who are over 65. She has no complaints about the work they are doing,
but wants to make way for the younger members of staff to be promoted. David
Green, head of Charles Russell’s employment and pensions unit, weighs up the
issues.

Legal issues

Under the Employment Rights Act 1996, employees who have either reached the
‘normal retiring age’ – or if there is no normal retiring age, 65 – are
prevented from bringing a claim for either unfair dismissal or a redundancy
payment when their employment is terminated.

Due to the recent case of Rutherford and Bentley v Towncircle Ltd (trading
as Harvest) and the Secretary of State for Trade &Industry however,
employers can no longer rely on the statutory default age provision of 65. An
employment tribunal found this to be discriminatory, therefore contrary to
European law and as such it should be disapplied.

There is currently no law in the UK outlawing discrimination on the grounds
of age and although the Government has introduced a code of practice, this has
no legal ‘teeth’ and is therefore of little benefit to the older workforce. The
way Mr Rutherford got round the lack of protection for the older worker was to
claim the cut off age for employment protection rights of 65 was discriminatory
on the grounds of sex. The basis of this was that the impact of the provision
adversely affected more men than women and the tribunal accepted this argument.

What the HR manager should do

The first step is to see if there is a normal retirement age for the
employees that the HR manager wants to dismiss. If so, and if this is not in
itself discriminatory (see below), the company can dismiss those employees with
minimal risk of a successful claim.

If, however, there is no specified normal retiring age, the company can no
longer rely on the default age of 65 and as such, if those employees are
dismissed, they will have the full range of employment protection rights. This
would allow them to present a claim for unfair dismissal, or for a redundancy
payment if appropriate. This clearly has far- reaching effects, and ought to be
considered carefully before any dismissal is effected.

What if there is a normal retirement age?

If the company does specify a normal retirement age, it must look at whether
that policy is in itself discriminatory. If discriminatory (ie, if it affects
one sex more than the other), then can it be objectively justified? Objective
justification may include the economic impact of maintaining health insurance
and life cover for an ageing workforce, so if it cannot be justified, then even
an agreed retirement age may be open to claims of discrimination.

HR issues

Every company should revisit their retirement provisions. The default age of
65 cannot be relied upon any more as laid down in legislation. It is no longer
sustainable and will not protect the company from claims of unfair dismissal
and/or redundancy payments from those dismissed for being over 65. If it has a
retire-ment age in place, consideration must be given as to whether it is in
itself discriminatory.

The Government is currently appealing the Rutherford and Bentley decision in
the EAT, and the case could end up in the European Courts. A final decision
will be some way off.

Key points

– Revisit your company retirement policy

– Is there a normal retiring age?

– If yes, is it discriminatory and if so, can it be objectively
justified on grounds other than sex?

– If no, the dismissal must be handled fairly as the individual
has full employment protection rights.

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