The abolition of the default state retirement age of 65 has been the source of a headache for the majority of employers for at least the last six months. Companies in financial difficulty have been frantically checking their employees’ personnel files for dates of birth in an attempt to terminate the contracts of those that may later be entitled to large redundancy payouts! It will by now be well known to most employers that as long as notice of retirement (for employees who are aged 65 or over on or before 30th September 2011) was issued by 5th April 2011, employers are able to justify these dismissals by reason of retirement (currently one of the six fair reasons for dismissal). Accordingly any dismissal after this date will be potentially a) age discriminatory; and b) unfair.

However many companies have been so busy trying to ensure that the procedures applicable until 5th April are followed correctly that they have given little thought to what they will do about their existing employees who will, inevitably, get older and at some point their employment with the Company will terminate.

Essentially there are two options available for employers. They can:

1. Introduce an Employer Justified Retirement Age (EJRA)

An employer will still be able to justify a company-wide retirement age if it can establish that such a retirement age is a proportionate means of achieving a legitimate aim. However the Government has already stated that it will not be easy to justify a set age for retirement, nor however will it be impossible. There are various points that an employer can make when arguing that an EJRA is justified:

a) To reduce the requirement to dismiss employees on grounds of diminishing performance, and allow them to retire with dignity;

b) To enable employers to plan financially for the longevity of their business, especially in the current economic climate;

c) To promote recruitment and retention within the company by ensuring there is a clearly defined career path as to when employees can be retired;

d) The additional cost of employing older employees.

Obviously the above points are yet to be tested in the UK Tribunals and Courts. However in the European Court of Justice, the general consensus seems to be that employment should be shared between the generations – the older employees have had their time and now the young need to be given an opportunity. For example, in the case of Peterson v Berufungsausschuss fur Zahtze fur den Bezirk Westfalen-Lippe [2010] IRLR 254, it was held that a maximum age of 68 for dentists was appropriate as it gave younger generations the opportunity of working.

Furthermore, the case of Rosenblatt v Oellerking Gebaudereinigungsges mBh [2011] IRLR confirmed that although a compulsory retirement age of 65 was basically age discrimination, it was justifiable if:
• that age had been negotiated between the Employer and the Union;
• the Employee would receive a pension so they are in receipt of replacement income; and,
• compulsory retirement has been widespread in the relevant country without having an effect on employment levels.

Please remember however that the above arguments have NOT yet been tested in the UK Tribunals and Courts!

2. Remove the Compulsory Retirement Age

This is currently viewed as being the safest option for employers to take and involves simply doing nothing (apart from reminding employees that the statutory retirement age has been abolished!) and addressing issues that may crop up with older employees as and when they arise.

For example, if an employee has issues with long term sickness, ensure that management are correctly trained in the procedures to deal with this and bring it to a conclusion – this will include obtaining the employee’s consent to request medical reports (from GPs and/or independent medical practitioners) and consider any recommendations such reports may make before thinking about dismissal.

Employers should also ensure that they have the correct policies and procedures in place to deal with potential issues of discrimination and harassment in the workplace, and therefore should seek expert legal advice in the preparation of such policies to ensure they are in line with current legislation. It should be borne in mind that, providing the correct advice is sought, there is nothing to stop an employer dismissing a 70 year old for poor performance in the same way as a 30 year old who is similarly unable to perform their duties to the required standard.

Companies therefore now have a crucial decision to make – do they want to introduce an “Employer Justified Retirement Age” (and can they justify it?!), or do they remove the retirement age altogether and review their current documentation (including contracts of employment) and procedures?

As discussed above, both options have their problems and it is therefore essential that expert legal advice is sought before making either decision in order to assess which will be the most beneficial for the company and, of course, which will hold the least financial risk. Canter Levin & Berg Employment Solutions offers comprehensive Employment Law advice to Employers at highly competitive prices, provided by qualified Lawyers with over 30 years experience. Please contact us on 08000 320 974 for your free 20 minute consultation and to discuss the options that are available to you.