What does the LAW say about Retirement Dismissals?

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Retirement Dismissals

Employment law in the UK allows older workers to voluntarily retire at a time of their choice and draw any occupational pension that they are entitled to. Employers, however, cannot set a retirement age or force employees to retire unless it can be justified that such an act is ‘a proportionate means of achieving a legitimate aim’.

For example, in Seldon v Clarkson Wright and Jakes, the claimant claimed that his compulsory retirement at age 65 was an act of direct discrimination. The Claimant, who was a partner in a firm of solicitors, had wished to continue as a consultant beyond the date of retirement.

However, the partnership deed contained a provision for the retirement of all partners upon reaching the legal age of 65. While the employment tribunal recognised that the Claimant had never previously objected to such a provision, it advised the employers to justify the cause for retirement (Seldon was the very first instance).

Let us take a closer look at this case and why this precedent is important when it comes to understanding retirement dismissals.

What Does the Law Say About Retirement Dismissals?

Under the Regulation 3(1)(a) of the Employment Equality (Age) Regulations, a person directly discriminates another on the grounds of that person’s age, if he treats them less favourably than he treats or would treat others.

Having said this, the employment tribunal considers such behaviour as objective justification, if it is a “proportionate means of achieving a legitimate aim”. Overall, the onus lies with the employer to prove that the discrimination was objectively justified and not a case of age discrimination.

Regulation 30 of the Age Regulations, presently provides for the lawful dismissal of employees upon reaching the age of 65, where the reason for the dismissal is retirement.

However, Regulation 30 was challenged at the European Court of Justice by the action group, Heyday, and was subsequently modified. Additionally, Regulation 30 doesn’t apply to the broader categories of the worker but only to “employees”.

Therefore, retirement dismissals for other types of workers, for instance, partners should be objectively justified. If this wasn’t the case, the employers may have to face an employment tribunal claim for age discrimination.

This holds even if the dismissed employee is aged 65 years or over and the employee’s contractual retirement age is 65.

Proportionate and Legitimate Aims

In the Seldon v Clarkson Wright and Jakes, the Respondent claimed that the compulsory retirement had to take place due to the following proportionate and legitimate aims:

  • it allowed the firm to meet the expectations of younger employees looking for a career progression into partnership;
  • it enabled and encouraged partners to make proper financial provisions for their retirement;
  • it ensured a partners’ turnover so that any partner could expect to become a senior partner when due;
  • it enabled the firm to properly plan the partnership and assess when vacancies in the partnership would arise;
  • that it helped limit the need to expel partners due to poor performance; and
  • it allowed the firm to protect its partnership model.

The Decision

The Employment Tribunal agreed that enabling employers to address the expectations of younger employees relating to career advancement was a permissible policy objective, especially when the firm had a strategy for retention and growth of able solicitors.

Similarly, the tribunal agreed that the aim of facilitating the partnership planning by having feasible long-term expectations regarding when the vacancies will arise was legitimate.

The firm’s aim of creating a congenial and supportive work culture among partners by giving up the power to expel partners for poor performance was also acceptable to the Employment Tribunal.

However, the Tribunal found no evidence that could prove the firm’s intentions of encouraging or enabling staff to make retirement provisions (particularly financial) in this case. If there had been such proof, the outcome may well have been quite different.

The Tribunal also questioned the firm’s intentions of ensuring a turnover of partners that will allow any partner to become a senior partner. According to the Tribunal, such an aim was unsupported by the evidence and it was also not legitimate as the aim appeared to be related to the partner’s age.

Going further, the Tribunal considered whether compulsory retirement at 65 was at all, a proportionate method of realising the accepted legitimate aims.

Before giving its judgement, the Tribunal considered the alternatives proposed by the Claimant, including the introduction of performance management and reducing partnership share.

It was found here, that there were, in fact, no alternatives to compulsory retirement as performance management would affect the nature of the partnership. On the contrary, having certainty in the retirement age would allow prospective partners to see when possible vacancies for partnership would occur in the future.

How Does The Retirement Procedure Work?

If you don’t want to retire, UK employment law entitles you to continue in your job after your employer’s retirement date. It is, however, important to remember that you only have a right to request to continue employment. Your employer can still turn down the request, provided he or she follows the correct procedure, which is as follows:

1) Your Employer Gives You Notice Of Retirement

Your employer needs to give you a minimum of 6 months (it can go up to a maximum of 12 months) notice of the retirement date. Having said this, the employer must also notify you (in writing) about your right to request to continue working.

2) You Can Request To Carry On Working

If you decide to make a request to continue employment, your employer has a duty to consider your request. Under the directives of employment law, this procedure is known as the ‘duty to consider procedure’.

You need to make sure that the request is given in writing and between 3 to 6 months prior to the intended retirement date. Additionally, you need to state that you are making such a request under paragraph 5 of Schedule 6 to the Employment Equality (Age) Regulations 2006, and whether you wish to continue working indefinitely‚ or until a certain date/period.

3) Your Employer Holds A Discussion With You

After receiving the request, your employer must hold a discussion with you within a reasonable period of time. When  your employer schedules a meeting, you are entitled to ask a colleague of your choice to accompany you to this meeting. Furthermore, your employer must notify you of their decision within a reasonable period of time.

If they have agreed to the request, they need to confirm whether the employment will continue indefinitely or until a certain date/period. Otherwise, they need to confirm the intended date of retirement.

4) The Right To Appeal

If your employer gives you less than 6 months notice on your retirement date and otherwise, undermines your right to request continuation of the employment in any way, you may submit a claim for unfair dismissal. If you took the issue in front of an Employment Tribunal, they would consider the following factors:

  • how far in advance to the retirement date, the notification was given
  • whether the employer gave a minimum of 14 days notification;
  • whether the employer properly followed the ‘duty to consider’ procedures.

If the notice is given less than 14 days prior to your retirement date, it automatically becomes unfair dismissal.

Similarly, if you received a notice of the retirement date but the job ended before that date, it will again be considered as an unfair dismissal.