Employment e-Brief – Last chance saloon for compulsory retirements

Tuesday 29th March 2011

Those who attended our recent breakfast seminar on retirement will already know that we are almost at the end of the line with compulsory retirement dismissals. With effect from 1 October 2011 the default retirement age will be a thing of the past but from this April the transitional arrangements apply.

In short, if an employee reaches 65 or is already 65 or over by 30 September 2011 then you can insist on their retirement. After the 30 September you will not be able to do so.

In order to insist however, the 6 month notices of retirement will have to have been served by Thursday this week at the latest (i.e. by 31 March 2011) in order to be risk free. This means that the notices will have to be in the hands of the employee by tomorrow in order to be “deemed served” by Thursday 31st March.

The very final date to serve a notice to retire someone by 30 September, albeit with a penalty of up to eight weeks pay for a notice of under 6 months, is the 5th April 2011, still only a few working days away. Due to that penalty, if you are going to do it, do it today or tomorrow!

Unlike some commentators in the popular press, we do not advocate mass “sackings” of employees over 65 before 30 September 2011, to avoid being caught by this change. We do not believe that age is correlated with performance; a much fairer mechanism is to use performance management processes whenever performance is unacceptable, regardless of an employee’s age. However, we anticipate that there may be some instances where employers do wish to use this “last chance saloon” to compulsorily retire people, rather than be faced with the alternative of managing poor performing employees in the normal way.

Do remember that employees who receive retirement notices in the next few days can still ask to work beyond retirement. Whilst you don’t have to agree to such a request, if you were inclined to agree to an extension but still wanted to insist on retirement at the end of the period, then the extension should not be for any longer than 6 months. The reason is that under the procedure if an extension of longer than 6 months is agreed then a new procedure has to be started in order to retire someone: after the 30 September there will be no procedure available to use.

Assuming then that a request to work beyond retirement age was made as late as it could be i.e. by 5 January 2012, then the last feasible compulsory retirement will be on 5 April 2012.

For any staff who reach age 65 on or after 1st October 2011, then the default retirement age is abolished, the statutory notice of a DRA can no longer be issued, and it is not possible to compulsorily dismiss (retire) staff on the grounds of age, unless you can demonstrate that you can justify having an Employer Justified Retirement Age (EJRA). Official guidance would suggest that justification will be very difficult to establish for most employers. Therefore from 6th April 2011 onwards, we recommend that all such staff should be managed in the same way as employees of any other adult age, and performance management processes should be fairly applied to all, irrespective of age.

For more information on this, or any other employment matter, please contact a member of the employment team.