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Ask the expert: Mandatory retirement


Ask the expert

This week, Esther Smith, partner at Thomas Eggar, and Anna Youngs, solicitor at Mills & Reeve, advise on the correct procedures to follow when employers are considering terminating employment of an employee on the grounds of retirement.

The question:

One of our staff has had health issues for years and has been on restricted duties for most of this time. He is still being paid for the full duties and we have no real business need for the restricted duties he is doing. Therefore we intend to deny his request to stay after he reaches 65 in November (on the above grounds if we need to provide a reason). Are we safe in just meeting with him and then confirming in writing?

Legal advice:

Esther Smith, partner, Thomas Eggar

I have some concerns about your proposed course of action here. It appears from what you say that the real reason for considering termination of this employee’s employment is not retirement but redundancy on the basis that there is no requirement for him to undertake the work he is employed to do.

On that basis if you want to terminate you should be using the appropriate procedure for redundancy. Alternatively, the other route you should consider would be capability depending on the nature of his health condition and his capabilities. This is always subject to following fair procedure and complying with any requirements imposed on you under the Disability Discrimination Act 1995.

As the employee turns 65 in November, I assume you have notified them of their right to request to continue working beyond that age between 12 and six months in advance of their 65th birthday. On the assumption that they have made, or are likely to make, a request to continue you obviously need to meet with them as prescribed in the retirement procedures, and consider their request before making a decision.

The regulations do not compel an employer to give a reason for refusing a request although clearly it may be much easier for an employee to accept the employer’s decision if he knows the reasons behind it.

However, in this case I would advise strongly against telling the employee that the reason for refusing is linked either to his ill health or the fact that you have no requirement for the work to be done. If you state either of these reasons as the reason for refusing he is likely to say that the real reason for termination is not retirement, but capability or redundancy, and further that you had not followed the procedures for dismissing for either of these reasons. This would result in an unfair dismissal claim, and could also give rise to an allegation of age discrimination on the basis that if this employee had not been nearing 65 you would have treated him differently, which is almost certainly the case.

The other consideration if looking to retire him is whether or not the organisation has any other employees working over the age of 65. In order to justify retirement as the reason for dismissal you need to be able to show that it is simply because an employee has reached a particular age that you wish to retire them. If you have other employees working beyond that age, it is very hard for you to justify retirement as the real reason, and this again may result in an unfair dismissal claim being pursued.

Therefore in conclusion, I have no problems in you looking to retire him subject to following the fair procedure, and to the organisation not having other employees over 65 still working. If you do have employees working over 65 you may struggle to use the retirement route and may be better off using the redundancy route again subject to fair procedure. This will obviously result in the employee getting notice and redundancy pay that is also beneficial to him as opposed to a retirement, which carries no financial payment.

Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information please visit Thomas Eggar

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Anna Youngs, solicitor, Mills and Reeve

The key issue is “what is the reason for dismissal”? If the reason for dismissal is retirement, then you must follow the statutory retirement process, which is set out below.

However, reading between the lines, it looks like the real reason for dismissing the employee is either that he is not able to do the job you want him to do, or because his current post is redundant. If one of these reasons is the real reason for dismissal then it will not be “retirement” within the meaning of unfair dismissal law.

You therefore have a couple of options:

1. Retire the employee. The statutory retirement process does not require you to give reasons for retiring the employee. My strong advice is that you do not give any reasons for retirement, other than “it is company policy to enforce retirement at the statutory retirement age, except in exceptional circumstances”. If you give reasons for retirement (in any case, not just this one) you risk revealing the “real” reason for dismissal. If the employee brings a claim for unfair dismissal, the Employment Tribunal will be keen to check that the retirement process was followed, and that retirement was the real reason for dismissal. Therefore there is still the risk that when examined at the Tribunal hearing the employer’s witness will reveal that the real reason for dismissal is not retirement (which could result in an automatically unfair dismissal).

2. Dismiss the employee on grounds of performance or redundancy, following as a minimum the statutory dismissal procedure. The employee could well argue that the reason he cannot perform his duties is because he is disabled within the meaning of the Disability Discrimination Act and therefore you would need to handle this with caution.

Although there are risks associated with retiring an employee in the circumstances you describe, if you get the process right this is still likely to be the safest option. A brief summary of the process is as follows:

Employers should notify employees of their intended retirement date not more than one year, but no less than six months in advance. If they do not, the employee may be entitled to compensation (please bear this in mind as the employee is 65 in November). If the employer fails to notify the employee six months in advance they will have an ongoing duty to do so, up to two weeks before the intended retirement date. Failure to provide this notification at least two weeks before the intended retirement date will make the dismissal automatically unfair.

If an employee has been properly notified of their retirement they must make their request to continue working at least three months before the proposed retirement date.

The employer must consider all requests not to be retired. The employer must meet the employee to discuss their request and must inform them of their decision as soon as is reasonable (there are some exceptions to this, but it is best to have the meeting). The employee may appeal against the decision. If this happens an appeal meeting should be held as soon as is reasonable.

If it is not possible to hold an appeal meeting within a reasonable period, the employer can consider the request without a meeting, as long as the employee’s case for continuing to work is taken into account. However, my view is that employers are hardly ever going to be able to get away without having these meetings!

This process feels a bit like the statutory dismissal process, which is why the statutory dismissal process does not apply to retirements, but does apply to almost all other dismissals.

Anna can be contacted at: [email protected]

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