Employers must tread carefully when retiring an employee, both to ensure the dismissal is fair and to avoid any claims relating to age discrimination. Solicitor Clare Thomas outlines the legal and practical procedures that must be followed.
The recent tribunal claim brought by a 69-year-old waiter dismissed from a hotel in Berkshire for being "too old" has once again highlighted the risks of age discrimination claims within the industry.
Employers would be well advised to give careful consideration to when and how they can dismiss an employee for being "too old".
Since October 2006 employees and workers have been protected from discrimination on grounds of age by the Employment Equality (Age) Regulations 2006.
Age discrimination is defined widely to include direct and indirect discrimination, victimisation and harassment. The regulations protect individuals from the start of the employment relationship through to after employment has been terminated.
The age legislation introduced a default retirement age (DRA) of 65, meaning an employee can be retired at the DRA provided it is undertaken according to the procedural requirements set out in the age regulations. If this is done then a dismissal on the basis of retirement can be deemed to be fair.
In order to ensure that a retirement dismissal is fair, employers must follow the statutory process. In brief:
- Employers must give the employee at least six months' written notice (and no more than 12 months' notice) of the intended retirement date and inform them of the right to request to continue working beyond that date.
- The employee can request to work past the retirement age. If they wish to do so, there are certain timeframes within which they must make this request before the intended date of retirement.
- The employer will have to meet with the employee to discuss the request (allowing the employee a right to be accompanied).
- Employers may refuse the request for business reasons but there is no requirement within the age regulations to set out reasons for any decision to refuse an application to work beyond retirement age.
- Employers must advise the employee of the right of appeal against a refused request and the individual must provide written grounds of appeal.
- The dismissal must not take effect while the employer is considering the request to continue working or an appeal.
- Dismissals should not take effect before the intended retirement date, and the employee must be given sufficient notice in accordance with his or her employment contract.
If an employer has a retirement age that is lower than the DRA then this must be objectively justified. This can be very difficult to prove in practice and so practically, most employers settle on 65 as their retirement age.
Of course, in certain circumstances, employers may try to objectively justify any discriminatory decisions or practices. Objective justification requires the employer to prove that the discrimination is a proportionate means of achieving a legitimate aim.
Economic factors such as business needs and efficiency may be legitimate aims, but arguing that it is more expensive not to discriminate is not in itself a valid justification.
Where an employer is seeking to objectively justify any potential age discrimination it is important to obtain legal advice and to properly document any decision to ensure there is a proper defence to any discrimination allegation
- Do consider the retirement age - is it lower or higher than the DRA?
- Follow the correct procedure when retiring an employee.
- Only terminate for retirement reasons on or after the DRA/contractual retirement age - do not terminate even the day before.
- Consider practices generally: adverts, interview questions and decisions to promote.
- Failure to follow the correct retirement procedure or objectively justify a lower retirement age may result in an age discrimination claim with uncapped compensation.
- Do not apply the DRA to non-employees - this will amount to direct age discrimination. Compulsory retirement at a particular age for any non-employees must always be objectively justified.