Can employers issue redundancy notices for over 65s before 6 April?

Posted on February 21, 2011 by Martin Malone

Based on Government announcements made in January this year and corresponding ACAS guidance, the almost universally held view was that employers needed to act before 6 April in order to issue notices to employees who are 65 or over to retire on or before the deadline for abolition of the default retirement age on 6 October. The reason for this is that, in order to act fairly under the current (but soon to be phased out) Regulations, an employer must give notice of retirement of at least six months. This allows time for the employee to object to the proposed retirement and for the employer to consider those objections (a necessary part of the process).

However, in an unexpected development which has caused a good deal of consternation, it seems from the draft regulations which have now been published that only those who turn 65 during the period from April to October can be forcibly retired and those already over 65 are already protected.This directly contradicts the previously announced position and it seems from the draft that, as a result, many notices already issued will have to be withdrawn.

The relevant section of the draft regulations reads as follows:

Transitional provisions
5.—(1) Despite regulations 2 to 4, the provisions mentioned in paragraph (2) continue to have effect in relation to the employment of a person if—
(a) notification in respect of that employment has been given under paragraph 2 or 4 of Schedule 6 to the Employment Equality (Age) Regulations 2006 before the date of the commencement of these Regulations, and
(b) that person will attain the age limit during the period that begins with that date and ends with 30th September 2011.

It is difficult to see how the regulations as drafted can conceivably cover those who are already 65 by the commencement of the transitional period. According to the explanatory note the new regulations will come into force on 6 April and that, at least, is consistent with the Government’s previous announcements.

End of the default retirement age

Posted on January 23, 2011 by Martin Malone

We have reported on several occasions over the last few months that the government is planning to scrap the default retirement age at age 65 but doubts were expressed about whether the change would be implemented as forecast. Those doubts have now been resolved as a result of the government’s announcement on 13 January that employers will no longer be able to force staff to retire at 65 from this October. Employment relations minister Ed Davey said that it was “great news” for older people, businesses and the economy.

The change means that from 6 April employers will no longer be able to issue notifications for compulsory retirement at the age of 65 using the default retirement age procedure. The current regulations require such notifications to be issued and for the employer to discuss the proposed retirement with the employee. However, the retirement can be imposed by the employer even if the employee disagrees.

Only one third of employers still apply compulsory retirement at age 65 but many have expressed concern about loss of the opportunity to implement retirements without the risk of facing claims for unfair dismissal and age discrimination. Interviewed on Radio 4′s Today programme Mr Davey sought to allay those fears by saying that guidelines would be issued to reassure employers that they can still conduct performance appraisals and fairly dismiss staff who are no longer able to perform their duties effectively. Of course, that means that there is room for uncertainty about capability and whether the determination is really age related. There also remains a good deal of concern about how employers will in practice demonstrate that unlawful discrimination is being avoided by using a proportionate means to achieve a legitimate aim.

John Cridland, director general designate of the CBI has highlighted the concerns. He said:

“The impact on employers, especially smaller ones, will be considerable. There is not enough clarity for employers on how to deal with difficult questions on performance. Less than three months is not enough time for businesses to put in place new procedures. The outcome will be more unpleasant and costly legal action.
“Employers accept that more people will want to work beyond 65 as the population ages, but the government has not recognised the fundamental question, which is how should employers manage retirement on the basis of a performance appraisal. This will be particularly acute in physically demanding sectors.”

So what does the change mean in practice for employers?

Employers must change their policies and procedures to remove those which rely on or refer to the default retirement age at 65.
Employers who want to retain a retirement age will have to give careful consideration to how it can be objectively justified. In most cases a blanket policy will fall foul of this requirement.
The “duty to consider” procedure needs to be phased out. From October this will play no part in arrangements for retirement.
Any employers who wish to rely on the current arrangements must start the process on or before 6 April.
Employers who wish to “retire” an employee will have to show a fair reason for dismissal.
Consideration needs to be given to reviewing and if necessary amending arrangements for performance appraisals and taking appropriate action where necessary. Confining appraisals and any corresponding dismissals to those around the current default retirement age is likely to be regarded as discriminatory.
There will inevitably be a significant increase in the number of employment tribunal claims resulting from the termination of employment of older employees.

As ever, our subscribers are more than welcome to contact us for advice and to make sure that all necessary changes are implemented in good time.

newsletter – default retirement age

Posted on December 20, 2010 by Martin Malone

The Government announced in July that as from October 2011, with phasing in from April 2011, the current exemption from anti-age discrimination law which allows compulsory retirement of employees at age 65 or over is to be abolished. The fact that there is still no official response to the consultation on the proposal although it ended two months ago may suggest a rethink is taking place (although it must be said that there is no evidence for this). If the government does back track on its proposal and decides to retain a ”default retirement age” after all it would be likely to set it at a higher age than 65.

Currently, in law there are two ways in which an employer is able to force an employee to retire without risking a successful age discrimination claim. The first is to take advantage of the age 65 default retirement age exception noted above (provided proper procedures are followed). The second is to use the provision which allows an employer to require an employee to retire at any age if this can justified as “a proportionate means to achieve a legitimate aim”.

No doubt from a strictly legalistic point of view reliance on the second of these on its own, as proposed by the government, is fine. However from a practical and human point of view relying on this second method alone has obvious disadvantages. It involves removing a simple and clear cut way to avoid the unpleasantness for both employers and employees of having to justify enforced retirement by, for example, reference to the employee’s capability. At the same time it almost guarantees more litigation to establish in particular cases whether dismissing an employee – for that is what enforced retirement is – was justifiable. For these and other reasons, many have argued that it would be sensible to retain a default retirement age, albeit increasing it to, say, 67 or aligning it in some way with state pension age.

It is evident that the very process of removing the default retirement age could be counter-productive, at least in the short term. Doing so will no doubt encourage employers of at least some employees aged 65 or over to give them enforced retirement notices before April 2011, while there is still time. Indeed already there are signs that this may be happening. Although they have denied that the proposed abolition of the default retirement age has had anything to do with their decision it is reported that the Longleat Estate has recently given dismissal notices to all 27 of their staff who are aged 65 or over (see “Longleat staff aged over 65 made to retire“, BBC News, 25November 2010).

It is worth noting that the EU Directive which requires Member States to ban age discrimination does NOT ban provision of a “default retirement age”. The directive itself specifically provides that “differences of treatment on grounds of age shall not constitute discrimination, if, within the context of national law, they are objectively and reasonably justified by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary“.

Interpreting the Directive, the European Court of Justice has confirmed in various cases that Member States can lawfully set a default retirement age provided it can be objectively and reasonably justified. It has recently indicated the sort of considerations which should be taken into account in particular cases (Rosenbladt v Oellerking Gebäudereinigungsges mbH on 12 October 2010) and that whether a compulsory retirement age can be justified in any particular case is a matter for the national courts (Georgiev v Tehnicheski universitet Sofia on 18 November 2010), confirming what it had previously said in the well known British Heyday case in which Age Concern failed in its bid to have the British age 65 default retirement age declared unlawful.

Those interested should keep a careful watch out for the Government’s response to the consultation noted above. Subject to that, however, the present position is that from April 2011 it will be unlawful to give notice to an employee requiring him or her to retire because they have reached age 65 (the reference to October 2011 above is because that is the final date at which such a notice can expire).

the coalition government and employment law

Posted on June 17, 2010 by Martin Malone

Our newsletter last month outlined employment law related proposals in the General Election manifestos of each of the three main political parties. Now of course these have no direct relevance. Instead the new Coalition Government Agreement states that there will be a review of “employment and workplace laws, for employers and employees, to ensure they maximise flexibility for both parties while protecting fairness and providing the competitive environment required for enterprise to thrive“.

What that means in practice is far from clear. However some key points are emerging:-

The Identity Cards scheme is to be scrapped by end August 2010. An “Identity Documents Bill” had its first reading in the House of Commons on 26 May. This will repeal the Identity Cards Act 2006 and end the ID cards scheme. It will remove ID cards’ status as travel documents or proof of ID and provide for scrapping the underlying databases as well as for cancellation of contracts with suppliers (notably Thales). Around 15,000 ID cards (at £30 each) have already been issued to select groups, including workers at Manchester and City of London airports, pending the previously intended nationwide roll-out in 2012. They will presumably become worthless save as museum pieces.
In line with a general policy of ending the gold-plating of EU Directives it is possible that parts of the 2006 TUPE Regulations (notably the “service provision change” part) and of the 2010 Agency Workers Regulations may be watered down.
A Pensions and Savings Bill is to provide for phasing out of the age 65 “default retiring age” (at which, subject to conditions, employees can currently be required to retire without unfair dismissal rights). The Bill is likely to include further provisions about increasing state pension age and for State Pensions to increase in line with earnings rather than inflation as from 2012 (it may not be over-cynical to note that the link to inflation was made when earnings were rising faster than inflation while now that position appears to have been reversed. Thus the Reed Job index recently reported a dip in salaries while inflation indicators are showing a sharp rise in both CPI and RPI ).
The right to request flexible working is to be extended to all employees.
Replacement of the Human Rights Act with a British Bill of Rights, proposed in the Tory manifesto, is not incuded in the coalition agreement (Justice Secretary Kenneth Clarke is reported as saying that repealing the Human Rights Act is not a high priority).
The Labour government’s proposed 1% rise in National Insurance contributions payable by employers from April 2011 is to be scrapped. However the 1% rise in employee NICs will go ahead, albeit offset for the lower paid by an increase in personal tax allowances.
There appears to be some uncertainty about the future of the Equality Act 2010 after the October 2010 implementation date was recently removed from the Government Equalities Office website.
The much derided Vetting and Barring Scheme has been stalled following a Government announcement on 15 June. Voluntary registration was due to start on 26 July with compulsory registration to be implemented by November 2010. The changes will affect 66,000 organisations including employers, voluntary groups and education authorities. New Home Secretary Theresa May commented:

“The safety of children and vulnerable adults is of paramount importance to the new government.

“However it is also vital that we take a measured approach in these matters. We’ve listened to the criticisms and will respond with a scheme that has been fundamentally remodelled.

“Vulnerable groups must be properly protected in a way that is proportionate and sensible. This redrawing of the vetting and barring scheme will ensure this happens.”
Theresa May is known to have opposed the scheme, describing it as “draconian”. She told the BBC: “You were assumed to be guilty until you were proven innocent, and told you were able to work with children”.

Other Coalition proposals include a clampdown on “unacceptable” bonuses within the banking sector; extension of proposals for social security benefits to be conditional on willingness to work; a cap on immigration from outside the European Union; some form of tax break for married couples and civil partners (Lib Dems able to abstain) and a review of the IR35 tax arrangements (which neuters tax advantages of individuals, notably IT consultants, who provide their services through wholly owned limited companies).

now that’s an expensive comment to have made

Posted on May 28, 2010 by Martin Malone

[picappgallerysingle id="1633994" align="left"] In our June 2009 newsletter we reported the case of Linda Sturdy, a senior NHS manager who was passed over for promotion because of her age. Unfortunately, when told that she was 57 a manager commented “I didn’t realise you were so old”. The upshot was that she received an award for injury to feelings which, including interest, came to £33,500 and is believed to be the highest of its kind.

She was also awarded £5700 plus interest for aggravated damages (reflecting the way in which the NHS Trust employer dealt with the matter) and an uplift of 25% to the award to recognise the Trust’s failure to follow the correct procedures.

Ms Sturdy has now recovered a further £147,000 for lost salary and pension rights, making the overall award just short of £187,000.

Now that’s an expensive comment to have made! According to the Yorkshire Post the case has cost the Leeds Teaching Hospitals NHS Trust over £500,000. This is at a time when it is under pressure to make cuts to services running into millions of pounds.