Age discrimination: retirement and dismissal aspects
Sarah-Marie Williams of Clyde & Co continues this month's series of articles on age discrimination with an overview of the retirement and dismissal aspects of the Employment Equality (Age) Regulations 2006.
It is anticipated that there will be a wealth of age discrimination claims following the introduction, on 1 October 2006, of the Employment Equality (Age) Discrimination Regulations 2006. By way of example, where an older employee claims unfair dismissal after being dismissed and replaced by a younger person, it is likely that he or she will also claim, in the alternative, that the dismissal was for reasons connected with age. While compensatory damages for unfair dismissal are capped at £58,400, there is no limit on the amount of compensation that can be awarded if a claim for age discrimination is successful. In addition, damages may include an award for injury to feelings.
The risk of claims arising out of retirement is a particular concern for employers.The Age Regulations provide for a default retirement age of 65 (although this will be reviewed in 2011), which means that compulsory retirement before that age will be unlawful unless a lower age can be objectively justified.In addition, the Age Regulations will amend the Employment Rights Act 1996, section 98, which deals with unfair dismissal in that retirement will become a potentially fair reason for dismissal. However, a retirement dismissal is only likely to be a fair dismissal where certain requirements are met, namely:
retirement is the genuine reason for the employee's dismissal;
the employee is dismissed on or after the age of 65 or at a lower retirement age that is the employer's normal retirement age and can be objectively justified; and
the employer has complied with the procedural requirements, including the duty to consider a request by the employee not to retire.
There are transitional provisions for retirements taking place between 1 October 2006 and 31 March 2007.
Duty to consider procedure
The new duty to consider procedure has been likened to that under the flexible working legislation, although there is no minimum qualifying period of service under the Age Regulations. The employer is required to notify the employee of the intended retirement date and of the right to request not to retire between six and twelve months before the date of retirement. Failure to do so during this period may result in the employer having to pay the employee up to eight weeks' pay (capped at the statutory maximum). Furthermore, if the employer has still not provided the employee with the relevant information at least 14 days before the intended retirement date, the dismissal will be automatically unfair.
An employee who has been notified of this right and who wishes to request not to retire must do so no more than six months and no less than three months before the intended retirement date. The request must specify whether he or she would like the employment to continue indefinitely, for a stated period or until a stated date beyond the intended date of retirement. The employer has a duty to consider any such request. It must either agree to the request or arrange a meeting with the employee to discuss it within a reasonable period. If, following the meeting, the employer decides to reject the request, there is no obligation to give any reasons. However, the employee has the right to appeal the decision and, if he or she does so, the employer is required to arrange an appeal meeting.
Dismissal and retirement
The Age Regulations will amend the Employment Rights Act 1996, section 98, to include new provisions setting out the circumstances when retirement will be deemed to be the reason for dismissal, when retirement will be deemed not to be the reason for dismissal and when it is for the employment tribunal to decide.
Dismissal is deemed to be retirement
Where the employee has no normal retirement age, the reason for dismissal will be deemed to be retirement provided that:
the employer gives six to twelve months' notice of the intended retirement date and the employee's right to request not to retire; and
the dismissal takes effect on or after the employee turns 65 and on the intended retirement date.
Where the employee has a normal retirement age over 65, the reason for dismissal will be deemed to be retirement provided that:
the employer gives six to twelve months' notice of the intended retirement date and the employee's right to request not to retire; and
the dismissal takes effect on or after the employee has reached the normal retirement age and on the intended retirement date.
Where the employee has a normal retirement age under 65, the reason for dismissal will be deemed to be retirement provided that:
the retirement age can be objectively justified by the employer (ie it does not amount to unlawful discrimination);
the employer gives six to twelve months' notice of the intended retirement date and the employee's right to request not to retire; and
the dismissal takes effect on or after the employee has reached the normal retirement age and on the intended retirement date.
Dismissal is not deemed to be retirement
Where the employee has no normal retirement age, retirement cannot be the reason for dismissal if:
the dismissal takes effect before the employee turns 65; or
the employer gives six to twelve months' notice of the intended retirement date and the employee's right to request not to retire, but the dismissal takes effect before the intended retirement date.
Where the employee's normal retirement age is over 65, retirement cannot be the reason for dismissal if:
the dismissal takes effect before the employee reaches the normal retirement age; or
the employer gives six to twelve months' notice of the intended retirement date and the employee's right to request not to retire, but the dismissal takes effect before the intended retirement date; or
the employer has notified the employee of an intended retirement date, but the employer has not given the employee six to twelve months' notice of the right to request not to retire and the dismissal takes effect before the intended retirement date.
Where the employee's normal retirement age is under 65, retirement cannot be the reason for dismissal if:
the dismissal takes effect after the employee reaches the normal retirement age but the normal retirement age has not been objectively justified; or
the retirement age has been objectively justified and the employer gives six to twelve months' notice of the intended retirement date and the employee's right to request not to retire, but the dismissal takes place before the employee reaches the normal retirement age.
In addition, where the employee has a normal retirement age (under or over 65) and the dismissal takes effect before the employee reaches this age, retirement cannot be the reason for dismissal.
Reason for dismissal to be decided by tribunal
The tribunal will determine whether retirement is the reason for a dismissal where:
the employer has not given six to twelve months' notice of the intended retirement date and the employee's right to request not to retire, regardless of whether the employee has a normal retirement age; or
the employer has given six to twelve months' notice of the intended retirement date and the employee's right to request not to retire, but the dismissal takes effect after the intended retirement date.
In the former situation, the tribunal must take into account a number of factors, including whether the employee was notified of the intended retirement date at all and, if so, when such notification was given, and whether the employer has given six to twelve months' notice of the employee's right to request not to retire. In the latter situation, the tribunal may take such factors into account.
Where it is concluded that retirement is the reason for dismissal, a tribunal will assess the procedural fairness of the dismissal, including whether the employer has complied with its obligations under the duty to consider procedure.
Consideration should be given as to whether there are any retirements due between 1 October 2006 and 31 March 2007 as the transitional provisions will apply during this period.There are different rules depending on whether the notice to retire an employee is given before or after 1 October 2006.
If an employee is given notice prior to 1 October 2006 that he or she will be retired after that date but before 1 April 2007, the notice should be the lesser of four weeks' notice or contractual notice. The employee should also be notified of his or her right to request not to retire on, or as soon as practicable after, 1 October 2006. The employee may make a request not to retire up to four weeks after his or her notice period has expired.
If an employee is given notice of retirement after 1 October 2006 that he or she is to be retired before 1 April 2007, the notice should be the contractual notice (or the statutory minimum if that is greater). The employee should also be notified of his or her right to request not to retire on, or as soon as practicable after, 1 October 2006. The employee may make a request not to retire up to four weeks after his or her notice period has expired.
Next week's article will answer some frequently asked questions on the Employment Equality (Age) Discrimination Regulations 2006.
Sarah-Marie Williams is a solicitor in the employment team at Clyde & Co (sarah-marie.williams@clydeco.com)
Further information on Clyde & Co can be accessed at www.clydeco.com
