Changes to the default retirement age mean employers will have to justify their retirement ages or risk claims.
The coalition government intends to phase out the default retirement age (DRA). This means the exemption allowing employers to retire employees at 65 without fear of an age discrimination claim will be removed. With the abolition of the DRA in the pipeline, what does this mean for employers looking to manage their workforce? A recent tribunal decision highlights the practical difficulties employers will face if the government enacts its policy on retirement age.
In Martin & others v Professional Game Match Officials, Martin, a professional football referee, was forcibly retired at 48 in accordance with the retirement policy operated by Professional Game (which supplies referees to the Premier League and Championship). As Professional Game was not relying on the DRA of 65, it needed to objectively justify its retirement policy.
Martin brought an age discrimination claim in the employment tribunal alleging the policy of forcible retirement was discriminatory. The tribunal agreed with him and found a compulsory retirement age of 48 was discriminatory.
In particular, the tribunal was unpersuaded by the selection of 48, as opposed to any other age for retirement. It referred to the fact that in other countries, retirement ages for referees ranged from between 45 and 50. This makes for an uncomfortable scenario for employers. The tribunal did not appear to be saying a retirement age of 48 would be impossible to justify. It appeared to accept that 48 was within an age range that could be justifiable. But it required the employer to go further and justify the selection of a retirement age of 48 as opposed to 47, 49, or any other age.
This approach echoes other cases in this area. In 2008, a tribunal found the Ministry of Justice was unable to justify a retirement age of 65 for non-employee recorders (the DRA only applies to employees and not other workers). Seventy was held to be a more appropriate age.
In 2009, the Employment Appeal Tribunal (EAT) had difficulty with the age of 65 as an appropriate retirement age for partners in a law firm, and felt that 70 was more likely to be justifiable. Martin suggests the test should be even more stringent: if an employer cannot satisfy a tribunal as to a precise age for retirement, they would have discriminated against their staff in dismissing them at that age.
So how can an employer justify a retirement age? The EAT has previously suggested employers should look at their own experience and analyse the age at which performance begins to drop off. But assessment of performance is hardly an exact science, and recently established companies will have limited experience to draw on.
Managing the workforce
If the government abolishes the DRA, employers may need to accept retirement will no longer be a risk-free route to dismissing an employee. They will have to look to their performance management procedures and rely on these as a means of managing their workforce. In Martin, the tribunal said the aims Professional Game was looking to achieve could have been attained via careful performance management.
It therefore seems likely that even if an employer does seek to justify a retirement age, it will need to have taken appropriate performance management action and assessed whether the same result could be achieved by that route.
By Louise Mason, senior associate, Hogan Lovells