Challenging retirement
No employee likes to be told they’re no good. No employer relishes the prospect of telling them. For the ones with years of good service under their belt, it might seem easier to hang on a while, call it retirement, and let them depart gracefully.
From October 2006, it won’t be quite so easy. Compulsory retirement at 65 or above can still be enforced, but employees will be able to claim unfair dismissal. Where you are imposing a compulsory retirement age below 65, you must be able to justify your choice of age. In either case, you must give employees a chance to talk you out of it.
It works like this: between twelve and six months before it would happen, employees must be told of the retirement date planned for them and that, if they want, they can ask to carry on working. If they don’t want to retire, you must meet them to discuss the situation. You must consider the request but don’t have to give reasons if you reject it. Be ready, though, to change your mind if the employee makes out a good case for staying on.
If you don’t follow the procedure, you could be liable for unfair dismissal with an extra eight week’s pay on top of the usual compensation.
If your reasons for wanting to retire employees are complicated – perhaps prompted by nagging concerns about their lack of productivity or ambition, failure to adapt to new technology or working practices, or difficulty adjusting to a youthful boss or working culture – beware. You may call it sparing their feelings but a tribunal may call it unfair dismissal and, possibly, indirect age discrimination.
If you let some people stay on and make some leave, your decisions must be consistent and untainted by their performance or personality. If you go ahead and impose retirement on everyone, then your employees will claim that you are only going through the motions of following this procedure, and that their retirement is unfair.
The regulations are still in draft and may change before they become law. Even so, the time to prepare is now. Is your contractual retirement age below 65? Has it been applied uniformly? Which employees are due to retire from October 2006 onwards? Do your managers need training to deal with requests to continue working? Put aside any thoughts of retirement – you have work to do.
This article first appeared in our Litigation Annual Review January 2006. To view this publication, please click here to open a new window.
