In the recent case of Bailey v R & R Plant (Peterborough) Limited, the UK Employment Appeal Tribunal (EAT) considered the procedural requirements for a valid retirement notice under the Employment Equality (Age) Regulations 2006 (“Age Regulations”). The case is important since the last date on which such notices could be served was 5 April 2011 so any defective notices cannot now be rectified. In this case, the EAT held that a retirement notice given by an employer had to inform the employee of the conditions that the employee would need to meet for a request by the employee to work beyond retirement to be valid. If the employer dismisses for retirement on the basis of a retirement notice lacking that information, a dismissal will be unfair and/or age discriminatory.

This is a surprising decision as it arguably places a greater burden on employers than the Age Regulations themselves. It is therefore likely that many employers will have unwittingly served defective retirement notices. These should now be checked urgently and advice should be sought if there is any possibility they might be defective.

What happened in this case?

Mr Bailey was employed by R & R Plant (Peterborough) Ltd. He had a normal retirement age of 65 and, six months before his 65th birthday, his employer wrote to him informing him of their intention to retire him at 65 and his right to request working beyond retirement, stating that such an application must be made in writing to be valid. Accordingly, Mr Bailey wrote to his employer explaining that he would like to continue working after his 65th birthday. A meeting was then arranged at which he was informed that it was Company policy to retire employees at 65 and that therefore the intended retirement would go ahead.

Mr Bailey’s subsequent Employment Tribunal claims for unfair dismissal and age discrimination failed as the Tribunal held that his request to extend his employment had been defective. This was because his letter had omitted to state specifically that it was made pursuant to paragraph 5 Schedule 6 of the Age Regulations (which provides that a request to work beyond retirement must be in writing and must state it is made pursuant to paragraph 5).

Mr Bailey appealed. The EAT allowed the appeal, holding that the employer’s retirement notice was defective because it did not comply with paragraph 2(1) of Schedule 6 to the Age Regulations (which states that an employer can lawfully retire employees at 65 provided the employer complies with the Regulations). In the present case, the employer had failed to inform Mr Bailey of all the essential conditions which any request to work beyond retirement would have to meet. According to the EAT, the employer should have expressly explained Mr Bailey’s statutory rights including the fact that, if Mr Bailey were to make a request to defer his retirement, his request must state that it was made under paragraph 5 of the Age Regulations. The absence of any mention of this meant the dismissal was automatically unfair.

The EAT awarded a basic award only on the basis that retirement would have taken place on the intended date in any event.

What this decision means for employers

The decision is surprising – on a plain reading of paragraph 2(1), all that is required of an employer is to write to the employee to put them on notice of their right to request to continue working beyond retirement. The EAT appears to have placed a greater burden on employers in respect of the notice they are required to serve in retirement situations. The EAT felt that an employee was unlikely to be aware of the statutory requirements and therefore construed paragraph 2(1) as imposing an obligation on the employer to inform the employee of the essential conditions for a valid request to be made (of which the requirement for the employee to state that the request to continue working is made pursuant to paragraph 5 is just one).

It is necessary for employees to cite paragraph 5 in any request to work beyond retirement. However, the outcome in Bailey makes such a failure by an employee irrelevant if the employer has already fallen at the previous hurdle by failing to advise the employee of the essential conditions they must comply with under the Regulations.

The decision is unfortunate for employers and will leave them at risk if they have issued defective retirement notices on or before 5 April 2011 (which was the last date that a valid notice could be issued under the now-repealed provisions). If such notices did not specifically spell out the requirements under paragraph 5 of the Regulations, employers will be exposed to opportunistic discrimination and unfair dismissal claims by employees who may wish to exploit the decision in this case. Such retirement notices cannot be corrected retrospectively, nor can fresh notices be drawn up.

You should now review any retirement notices that were issued prior to 6 April 2011 and take appropriate advice. Where retirement has not yet taken effect, you may consider allowing the employee to remain in employment to head off risk, but no fresh retirement notice can be issued under the Schedule 6 process. Alternatively, you could try and find some other fair reason for dismissal outside retirement, but this will undoubtedly involve instigating and following a fair procedure, such as a redundancy or capability process.

It remains to be seen whether the case of Bailey will be appealed, but for the time being at least, Employment Tribunals are bound to follow it and employers should be aware of the risk this creates.