I wrote about the anomaly in the draft Regulations last month when I pointed out that it appeared that the new Regulations appeared to exclude the option to give notice to over 65s before the default age was abolished.
The Government announced in January that it was not going to back down on proposals to abolish the so called “default retirement age” on 1 October 2011. Many had argued that increasing the age from 65 to some higher age would be a better solution, on grounds of simplicity, of reducing the number of tribunal claims and of “humanity” (a default retirement age avoids the unpleasantness of having to tell an ageing employee that he is no longer up to the job). However that is not to be.
Under current law, provided the employer has complied with statutory conditions, notably giving between 6 and 12 months notice, he can require an employee to retire at age 65 or over without facing the risk of a tribunal claim. The regulations are due to come into effect on 6 April 2011 and will ensure that, subject to a transitional arrangements, employees whose dismissal takes effect on or after 1 October 2011 will be entitled to claim unfair dismissal and/or unlawful age discrimination even if they are aged 65 or over.
Although this basic position is clear the detail of the transitional arrangements was questionable. Originally the Government indicated that if the minimum 6 months’ notice expired on or before 30 September 2011, then all else being equal the current law would apply so that the 65 year old employee would not be able to complain to a tribunal. That appeared to mean the notice had to be given by 30 March 2011 even though the new Regulations would not be in force until 6 April. The draft regulations as issued have avoided the “retrospective legislation” implications that involved – but in doing seemed to have produced a different complication.
Under the transitional provisions set out in the initialbdraft regulations for an employer to take advantage of the current law the basic requirements were that (i) the employee must have their 65th birthday between 6 April 2011 and 30 September 2011 and (ii) the notice of dismissal must be given before 6 April 2011. As the notice of dismissal can be 12 months notice, it follows that provided the employee became 65 between 6 April and 30 September 2011, the dismissal itself could be set for any time up to 5 April 2012 if, in this example, notice was given on 5 April 2011. So far so good.
However there appeared to be an (in practice probably not very important) potential problem if the employee became 65 BEFORE 6 April 2011. The transitional arrangements could not then apply (as condition (i) above will not be fulfilled). The peculiar result would have been that, at least in theory, it would be possible for an employer to take advantage of existing law by giving 6 to 12 months’ notice before 6 April 2011 requiring an employee who has their 65th birthday in May or June 2011 to retire after 6 or 12 months but it would NOT be possible for him to do the same if the employee had their 65th birthday before 6 April 2011. By the time the notice given to the latter employee expired the current law would have been revoked by the new Regulations. The employer would not be able to take advantage of the transitional arrangements in the new Regulations with the result that that employee would be able, if the facts made it worth while, to sue the employer for unfair dismissal and/or unlawful age discrimination.
HOWEVER, the anomaly in the drafting has now been resolved. The applicable provisions are now as follows.
The last date for giving notice of intention to retire an employee under the statutory regime remains April 5 2011.
The statutory regime allows for a maximum of 12 months’ notice, so that a notice given before April 6 2011 could expire after September 30 2011. Under the new regulations:
- the old provisions will apply to retirements of employees who are 65 on or before September 30 2011 provided that the employer has given notice of intention to retire on or before April 5 2011;
- there remains some uncertainty as to the latest date on which such notice could expire – the usual rule is that the day on which notice is given is excluded from the time period, so the maximum notice of 12 months would expire on April 5 2012;
- an employee could still make a request to continue working, but would need to do so on or before January 4 2012 (as more than three months’ notice is required); and
- following such a request, an employer could agree to delay the retirement date by six months or less and still rely on the old provisions. This could mean that the latest retirements under the old regime are on October 5 2012. If a longer or indefinite extension is agreed, any subsequent retirement would need to be justified.
Our advice is that notice should be given on or before 5 April 2011. Work on the basis of the end of March with a view to ensuring that there is no risk of the employee not receiving the notice before the deadline. Wherever possible, give notice which is due to expire after six months, e.g. notice given on or before 31 March should be at least six months but expire on or before 30 September (again allowing a few days). Don’t extend the retirement date under any circumstances. By applying this approach, the existing Regulations can be relied on with minimal risk.