Retirement

5th April 2011 is the last day for serving notice of compulsory retirement on an employee before the current regime is abolished.

As noted in our January issue, the default retirement age is being abolished.

There is one final opportunity for employers to take advantage of the existing scheme. Employees may be lawfully retired provided:

(i) Notice of intention to retire is given by 5th April 2011 (we recommend on or before 30th March to avoid all liability); and

(ii) The employee has attained or will attain the age of 65 by 30th September 2011.

As long as the employer complies with all of the procedural requirements, then any such retirement will automatically be fair and no claims will arise.

After 6th April, we will enter a ‘brave new world’ when it will no longer be possible to insist that employees retire when they reach the age of 65 without risking claims for unfair dismissal and age discrimination.

If you wish to retain a compulsory retirement age in your business, whether 65 or some other age, you will have to justify it as being a proportionate means of achieving a legitimate aim. Whilst there is some guidance from existing case law, no one really knows how the Tribunals will interpret this requirement. In addition, each individual retirement will have to stand on its own merits as a fair dismissal for ‘some other substantial reason’ under the Employment Rights Act 1996.

For most employers, the safest option is going to be to remove the compulsory retirement age. Retirement can still take place at any age by consent or at the employee’s request. However, as the statutory framework for discussing retirement is being swept away along with the default retirement age, care is needed when initiating such discussions.

In the absence of agreement, businesses will inevitably be forced to consider questions of long-term sickness, work performance and managing disability more often in the context of an aging workforce. It would plainly be prudent to review your company’s policies and procedures in these areas.

For further advice, please contact commercial@blasermills.co.uk.