This week the experts, Adam Partington and Esther Smith advise on how to deal with retiring workers.
The question: Default retirement age
We have a default retirement age of 65 and follow the usual procedures of writing to staff approaching retirement. The organisation has to date accepted every request for staff to remain at work but there is an increasing view that they would like some guidance on how to turn down some requests for posts that will continue.
I would like to make our policy more explicit to indicate why we may in some circumstances reject application to remain in post (I am aware we don’t have to give a reason). Can anyone share with me some detail they use for this and how they have handled the perceived feelings of rejection from affected staff?
The posts in the main will continue as is but there is a growing feeling that in some areas we are keen to encourage new skills into the organisation, to benefit those seeking employment in our local community and to encourage internal succession moves.
Legal advice:
Adam Partington, solicitor, Speechly Bircham
Although your question relates to the reasons given for retiring an employee, it also raises another, potentially more serious issue in relation to Normal Retirement Age (NRA) which it is important to address in the first place.
In order for a ‘retirement’ dismissal to be fair, the employer must show that retirement is the reason for the dismissal and also that the dismissal was fair, which involves the employer following a fair process. You seem to be familiar with the process so I will not go into the detail of it here.
In order to establish retirement as the reason for the dismissal you also need to have regard to the following considerations. Regulation 30 of the Employment Equality (Age) Regulations 2006 (the “Age Regulations”) operates to exempt retirement dismissals from the prohibition on age discrimination where an employer retires an individual on or after their 65th birthday (the national default retirement age is 65).
Despite the provision of a national default retirement age of 65, the contractual retirement age (“CRA”) and NRA cannot be ignored. The CRA is the age at which employees are obliged to retire under any relevant terms of a contract of employment. The NRA is the age at which an employee holding a particular position normally retires in an organisation.
The NRA is based on the reasonable expectation of the group of employees holding the same position as the retiring individual. If there is no reasonable expectation of retiring at a particular age then the default NRA is 65. If an employer always requires its employees to retire at 65 and never grants requests to work beyond age 65, the NRA will also be 65. However, if the employer regularly grants requests to work beyond the CRA, the NRA may change.
If requests are regularly granted, but there is no consistency as to the later age that employees retire, it is likely that there will be no NRA. In those circumstances, the NRA will default to either the age of 65 or, if it is higher, the employer’s CRA.
If requests are regularly granted and all employees (or all employees in a particular group) are allowed to continue to work until the same age then that age is likely to become the NRA. The employer will then be unable fairly to retire its employees (or employees in that group) before this later NRA.
I am not clear on the facts available to me whether the way you have allowed employees to work beyond 65 in the past would have an impact on the NRA. You should therefore obtain specific legal advice to determine what impact your approach to retirement may have had on the NRA. It may be that this would have an impact on the reasons you give to employees for rejecting their requests to allow them to continue working.
As far as your substantive question is concerned, I agree that providing reasons can be a good way to manage the retiring employee’s possible feelings of rejection. You will, however, need to be careful that the reasons you give are of general application and not personal to the employee as this may inadvertently expose you to a discrimination claim.
The reasons you propose seem reasonable and non-personal, subject to one observation. Giving a reason that you want to recruit more people from the local community could open you up to possible race discrimination allegations although it would be necessary to know more about the geographical area in which you are recruiting to provide firmer advice in this regard.
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Esther Smith, partner, Thomas Eggar
Generally speaking, so long as you follow the prescribed procedure when retiring someone you are protected against a claim. However, the difficulty can arise, in theory, where you are ‘retiring’ someone who has reached 65 using the prescribed procedures but you let others stay on over 65, it may be difficult to justify that ‘retirement’ is the real reason for dismissal.
In such a case, the employee may challenge the fairness of their dismissal. In terms of guidance the only practical suggestion, other than not keeping anyone on beyond 65, which is not necessarily the best thing for your business, would be to ensure when you agree an extension that there is a real business need for it, or a justification as to why that particular role or position needs to be continued by that person.
Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information, please visit Thomas Eggar.
