From 6th April 2011 people can no longer be forced to retire at 65, writes Infologue.com Workplace contributor and labour lawyer of Beers Solicitors, Paul Housego. People are living longer and the government needs people to work longer to save for their retirements to reduce the cost of state support for the elderly. This does not stop people who want to retire at 65 from doing so, but simply gives them the choice to work for longer, rather than being forced into financial disarray at a set age (though you might think 65 years was long enough to prepare).
Up until now, a properly organised retirement was deemed to be a fair dismissal and was an exception from age discrimination protection. No longer – so employers are now open to discrimination claims being brought by employees who have a fixed retirement age (whether or not 65), where previously the employees’ claims would have been barred. Whereas unfair dismissal claims have a ceiling, age discrimination claims do not and there will also be an extra amount for injury to feelings.
Whilst in most cases people will have the choice of when to retire, it is still possible to retire people compulsorily where it can be objectively justified. This means that where employers keep fixed retirement ages (they don’t have to) they will have to show a legitimate aim is being pursued and that making people retire is a proportionate means of achieving that aim. It is not going to be easy to justify what is, after all, direct age discrimination. Some employers have simply abolished retirement ages so that no one leaves save by dismissal or resignation.
Employers will also have to be cautious when they discuss their future plans with workers so as to avoid the potential for discrimination claims from both older workers – who feel they are being forced out – as well as from younger workers who may feel that their succession planning is not being considered.
If there are redundancies and those over 65 are not selected that is not the end of potential problems, for it may be that the younger people selected say that the older ones were protected because of the risk of age discrimination claim, so that they (the younger ones) have themselves suffered age discrimination.
So employers will not now be able to state that the reason for dismissal is retirement. They will have to show it was one of the list of potentially fair reasons set out in the Employment Rights Act 1996, was (in the particular case in question) fair and that a fair procedure was followed. Most likely, the catch-all called “some other substantial reason” will have to be used, or lack of capability.
Until now, employers knew where they were and people could be compelled to go at 65 with no possibility of claims for unfair dismissal or discrimination on grounds of age. However, now that the default retirement age has been abolished that has changed.
This means that it is no longer an option to carry underperforming people to retirement – they may chose not to retire. Unfortunately, it just got more complicated, again, and there will be many who trip up over this change. Please take care not to be one of them.