Repeal Of The Default Retirement Age

Colchester and Ipswich Employment Law Seminar7th April 2011 – Mark’s Tey Hotel

MANAGING RETIREMENT WITHOUT THE DRA

A guide for employers


History of the DRA

• DRA of 65 introduced in 2006

• Government commitment to review in 2011, brought forward to 2010

• If an employer dismissed an employee over 65 and followed the statutory retirement procedure the dismissal would be both fair and non- age discriminatory

0

5

10

15

20

25

2008 2033

% Population over 65


Repeal of the DRA

Non-employees

Employees

Justification needed for reasons related to age (as before)

Justification needed for treatment related to age

- Retirement no longer a fair reason to dismiss

- Age-related dismissals must be justified

* see transitional provisions

Retirement could be a fair reason for dismissal if followed statutory retirement procedure

Post April 2011Pre – April 2011


Impact

(vi) Retirement

(v) “SOSR”

(iv) Illegality

(iii) Redundancy

(ii) Conduct

(i) Capability

•No age discrimination exemption for retirement in the Equality Act

•No fairness process in the Employment Rights Act


Transitional Provisions

• Any notice informing an employee that they are to be retired must have been served on the employee no later than 5th April 2011;

• The employee must have reached the age of 65 no later than 30th September 2011;

• The employee’s Intended Date of Retirement must be no later than 5th April 2012*;

• The employer must follow the statutory retirement procedure

* If these requirements have been complied with the employee may make a request to work beyond retirement for up to a maximum of 6 months so the date of retirement will actually be 3/4/5th October 2012.


Options for the future

1) Employer Justified Retirement Age

“EJRA”

4) Objective Justification (case by case basis)


Employer Justified Retirement Age – “EJRA”

• Employer imposed retirement age

• Currently accepted in exceptional circumstances

• Must be able to provide evidence that use of an EJRA is justified

• Test: ‘proportionate means of achieving a legitimate aim.’


Employer Justified Retirement Age – “EJRA”

ACAS – Guidance for Employers: Working without the DRA

“The test of objective justification is not an easy one to pass and it will be necessary to provide evidence if

challenged; assertions alone will not be enough”


Objective Justification – Case by Case Basis

• Employees are considered on a case by case basis

• Dismissal of an older employee must be under one of the 5 potentially fair reasons

• Typically SOSR

• A fair procedure must have been followed- s98(4) ERA 1996


Objective Justification

• Age - direct discrimination can be justified.

• The treatment, provision, criterion or practice should be:

“a proportionate means of achieving a legitimate aim”


LEGITIMATE AIMS


“DEAD MAN’S SHOES”


COLLEGIALITY


LONG TERM PLANNING


COST


PROPORTIONATE MEANS

Case law


Wolf v Stadt Frankfurt am Main

• Mr Wolf born in 1976

• Applies for an “intermediate career” in the German fire service

• The German government’s rule restricting applications to join the fire service for “intermediate career” to those applicants under 30 years old

• Application rejected because of his age


Wolf v Stadt Frankfurt am Main

• ECJ agreed that the German government was justified in applying a rule restricting job applications to the fire service to those under 30 years old;

• Scientific data provided showing those over 45 years old had decreased physical stamina required for the job and that fire-fighters over 50 years old no longer have capacity to rescue persons;

• A “run-in” period of 15 years was found to be reasonable.


Rosenbladt v Oellerking Gebaudereinigungsges

Mrs Rosenbladt was employed as a part time cleanerworking 2 hours a day, 10 hours a week

Her employment contract contained a clause stating that her contract would end on the month she was entitled to receive her state pension or if later, at the end of the month she reached 65

She was served her notice of termination in accordance with her contract

She brought an action against her employer for the unlawful termination of her contract on the grounds of age discrimination


Rosenbladt v Oellerking Gebaudereinigungsges

Following Rosenbladt, the ECJ held thata compulsory retirement age of 65 in anemployment contract can (in theory) be justified if:

• The age of retirement has been collectively negotiated with a union

• The employee will receive a pension on retirement to replace their income

• Levels of employment have been unaffected by the widespread use of a compulsory retirement age in the relevant country


State pension age

• By 2016, the state pension age will be 66• By 2040 this will rise to 70

State pension age may become an importantreference point in future cases on EJRA

Recent ECJ cases show great significance will be placed onwhether the employee has access to a state pension

Justification is more likely to exist if the employee has access toa state pension


Martin v Professional Game Match Officials

Mr Martin was retained as an assistant referee official at professional football matches by PGMOL

All match officials were continually observed and their performances assessed to maintain fitness standards

PGMOL’s retirement policy stated that upon officials reaching the age of 48 their services would no longer be retained as they were deemed physically unfit to referee at the high level required of them

Mr Martin’s brought a claim against PGMOL for automatic unfair dismissal and direct age discrimination


Martin v Professional Game Match Officials

• ET decision

• Found a retirement age of 48 for football referees could not be justified

• Although the aim – ensuring a high standard for referees - was legitimate, the method of achieving it was not proportionate

• Other European countries had different retirement ages for referees

• The ET concluded that there were less discriminatory ways of achieving the same aim eg. Utilising on-going fitness and competency tests for all referees and removing those with the lowest scores.


COMPENSATION

• Where do career losses end?• Whole of life less contingencies?


Exemption from age discrimination

• Can stop insured benefits at 65 (or any increased state pension age if higher);

• Self insuring employers;

• Contractual benefit?

• Occupational pension schemes


Practical Steps

• Check retirement notices issued correctly

• Remove references to retirement if no EJRA

• Performance Management Procedures


Practical Steps

• Appraisals, workplace discussions

• Culture change

• Good leaver/Bad Leaver


Workplace discussions• Review ACAS guidance

• Incorporate into/introduce appraisal process

• Aims and aspirations where does the employee see themselves in 1/3/5 years (short/med/long) term

• Consider future plans for the business


Workplace discussions

• Future work requirements

• Training needs

• Performance (now/future) “SMART”

• Pre appraisal documentation/questionnaires


Good leaver/Bad leaver

• Bonus or commission • Share options and schemes• Employee shareholder provisions

• Retirement is often treated as a ‘good leaver’ reason;

• Resigning is often a ‘bad leaver’ reason.



Lisa Hayward

Associate Solicitor

Employment Team

Email: [email protected]

Direct Dial: 01473 406316

mailto:[email protected]

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Repeal Of The Default Retirement Age

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