Older and wiser and not ready for the scrapheap

A recent employment tribunal decision could herald the end of the
traditional retirement age as we know it

Section 109 of the Employment Rights Act 1996 provides that an employee
cannot claim unfair dismissal once they have reached or passed the normal
retirement age for the job, and s.156 imposes a similar restriction on
entitlement to redundancy payment. However, these restrictions have been under
attack for some time.

In Harvest Town Circle v Rutherford, the normal retirement age for employees
was 65, and Mr Rutherford was 67 years old when he was made redundant. He
claimed unfair dismissal and a redundancy payment, though on the face of it,
his age excluded him from both. The tribunal refused to apply the age exclusion
on the grounds that the statutory exclusion was discriminatory as more men than
women continue to work over the age of 65. However, the employer’s appeal was
allowed on the grounds that the statistics relied upon were inadequate, and the
case was referred back to the tribunal for a rehearing. Before it took place,
Harvest had gone into liquidation and the Secretary of State had in effect
taken over the role of defending the claim.

In Bentley v DTI, Mr Bentley had been made redundant at the age of 71 when
the firm he had worked for went into receivership. He had brought proceedings
after his claim for a redundancy payment was refused by the Secretary of State
due to his age. The tribunal directed that the two cases should be heard
together.

The tribunal decision was released in the last week of August, and may
signal the end of ‘retirement’ as we know it. Following a detailed
consideration of statistics from the Labour Force Survey and taking into
account the guidance given in the appeal court, it was found that the exclusion
did have a disparate impact upon men. But in any event, was the exclusion ever
justified? Redundancy pay is intended to compensate those who lose their jobs
through no fault of their own where there is an expectation that their
employment would continue. At retirement age, no employee could hold that
expectation. Compensation for unfair dismissal is similar; without any
exclusion, an employer would be unable to predict recruitment requirements,
make opportunities for younger staff, or even gracefully end an older
employee’s career if they were no longer able to cope with the job. The
tribunal found that these arguments were insufficient to overcome the
discriminatory effect of the provision.

Subject to any appeal, this will mean that men and women over the age of 65
will be able to bring claims for unfair dismissal and for a statutory
redundancy payment. But it is likely that any such claims submitted now would
be stayed pending confirmation of whether there is going to be an appeal. If
there is, the case could proceed as far as the European Court of Justice, and
may therefore take many months to resolve. However, as the Government’s stated
intention is to introduce age discrimination legislation earlier than the
required deadline of 2006, it is also possible this decision could prompt the
Government to legislate now. In the meantime:

– Employees at or past the normal retirement age may bring claims for unfair
dismissal or redundancy payments

– Employers should talk to employees approaching retirement age. Many look
forward to retirement and will generally be happy to leave at the normal
retirement age

– If an employee does not wish to retire, discuss their future employment
requirements and explore the possibilities of continued/alternative employment

– If there are problems with an employee, take appropriate steps to address
them, and follow the disciplinary/performance procedures

– Employers should consider whether there is a ‘fair’ reason for dismissal
and ensure that a fair procedure is followed

Sue Nickson is partner and national head of employment law at Hammond
Suddards Edge

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