Wake-up call: Claims for loss of earnings

11 March 2011
Wake-up call: Claims for loss of earnings

THE PROBLEM A senior employee in my hotel business has had an accident while at work and we agreed on an early retirement as his injury would not allow him to return. However, he claims that the abolition of default retirement age means that he could have worked for much longer if he had not been injured. He is now claiming for loss of earnings. Is it likely that this claim will be successful?

THE BACKGROUND The workforce demographic is changing. With the reduction in birth rates following the "baby boom" coupled with improved health, it is predicted that by 2020 one third of the workforce will be over 55.

If by then you reach 65, you can expect to live for a further 23-plus years. Therefore, employers will need to look to older workers to satisfy their recruitment needs. Workers will also want to work longer to maintain their lifestyle given falling returns on pensions and changes to pensionable age.

THE LAW Last week, the Government announced its intention to abolish the Default Retirement Age (DRA) of 65. This will be phased out during 2011 with the transitional arrangements coming into force from 6 April 2011 as a prelude to the abolition of the DRA on 1 October 2011.

Up to 6 April 2011, the legislation has not changed and under the Employment Equality (Age) Regulations 2006 you are allowed to retire an employee at or above 65 without discriminating against them. This is providing you notify the employee of their intended retirement date and their right to request work beyond the intended retirement date, in writing and not less than six months before dismissal.

If an employee so wishes, they can request to work beyond the intended retirement date providing the request is made in writing, which the employer must then consider. The regulations also allow for an appeal process.

However, after 6 April 2011, although an employer can no longer rely upon the DRA, they will still be able to operate their own compulsory retirement age, providing they can objectively justify it as a proportionate means of achieving a legitimate aim, for example, if a job requires a lot of manual labour that will be difficult - and perhaps dangerous - for an older member of staff. A failure to do so may mean that the dismissal will be unfair and may well be discriminatory.

THE IMPACT In either scenario it is open for an injured employee to allege that, had it not been for his injury, he would have been able to continue in his work, even if it is the employer's present policy to retire at the age of 65. As a consequence, the injured employee may claim a continuing loss of earnings as part of any civil claim for compensation.

As to how long an employee can claim continuing loss of earnings, this depends upon a number of factors including the nature of his job, his pre-accident medical history and the average retirement age for the sector. On the face of it, there is no reason why a member of the management team or service staff should not work to the age of 70 or beyond if they stay fit.

EXPERT ADVICE It would certainly be worthwhile considering what alternative work is available for the injured employee or what reasonable adjustments can be made in respect of working hours, work methods and equipment to help the employee to continue working. Indeed, there is a requirement to consider reasonable adjustments under the Disability Discrimination Act for disabled employees.

You may also wish to consider discussing the options with your employers liability insurer before making a decision. Most will provide rehabilitation support and advice on a return to work programme.

Noel Walsh, head of commercial insurance at law firm Weightmans

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