Analysis and commentary by Reed Smith attorneys on developments in employment and labor law
Summary
The EAT has issued a decision in the well-known and long-running retirement case of Seldon v Clarkson Wright and Jakes, which dealt with the question:
Was the retirement age of 65 PROPORTIONATE to achieve the firm’s stated aims of retention of staff and workforce planning?
Following the removal of the default retirement age,…
In the recent case of Compass Group plc v Ayodele, the UK Employment Appeal Tribunal (“EAT”) has ruled that an employer must give genuine consideration, in good faith, to an employee’s request to work beyond retirement under the Employment Equality (Age) Regulations 2006 (the “Age Regulations”). A blanket refusal to grant any such request without giving any consideration to the employee’s representations in circumstances where the decision is pre-determined (e.g. by a company policy), will result in the dismissal for retirement being unfair.
This case will be of interest to those employers who have already served notice of retirement on employees on or before 5 April 2011 which, because of the forthcoming abolition of the default retirement age of 65 on 1 October 2011, is the last date on which employers could serve valid retirement notices under the Age Regulations.Continue Reading Employer’s duty to consider request to work beyond retirement
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…
UK employment law seems to be in a constant state of flux and this year is no exception. Summarised below are the main legislative changes that employers need to know about this April. There are some urgent action points to consider before 6 April regarding serving any last minute retirement notices and the timing of termination payments.
Continue Reading What’s Coming Up in UK Employment Law in April?
In our last update, we reported that the UK Government had issued its response to its consultation “Phasing out the Default Retirement Age”, confirming that from 1 October 2011 there will no longer be a default retirement age (DRA) of 65. Draft Regulations were laid before Parliament in February but after much criticism over how they should be interpreted, a revised draft of those Regulations (Employment Equality (Repeal of Retirement Age) Regulations 2011) have been made available and are due to come into effect 6 April 2011. Several of the Government’s original proposals set out in their response to the consultation (and as set out in our last update) have been changed. In particular, changes concern when the last notice of retirement can be served and when the last date it can expire. There was some confusion over retirement of the over 65s but this was a drafting error and has been rectified in the revised draft Regulations.
Confusion about when notice of retirement can expire
Under the current rules, an employee must be given a minimum of six months’ and a maximum of twelve months’ notice to be compulsorily retired. The Government first indicated in its response to its consultation that because the DRA will not apply from 1 October 2011, an employer who wishes to effect a compulsory retirement would need to issue the retirement notice by 30 March 2011 (or before 6 April 2011 under the “short notice” rules). It was understood that this meant that such employees would have to be retired on or before 30 September 2011.
On 17 February 2011, ACAS issued a Guidance update indicating this view was not entirely correct. The ACAS Guidance indicates that employers will in fact have until 5 April 2011 (but no later) to issue notice to an employee of compulsory retirement and that notice (being no less than six and no more than 12 months under the current rules) may run its course and so may expire after the 30 September 2011 deadline. Short notice notifications will not be permitted on or after 6 April 2011. The revised draft Regulations confirm this.Continue Reading Phasing out the UK default retirement age: legal update
The UK Government has now issued its response to its consultation “Phasing out the Default Retirement Age”, confirming that the default retirement age (DRA) of 65 will be abolished from 1 October 2011. The last retirement notice under the current procedure should be issued by no later than 30 March 2011, so employers have very little time to prepare. We understand draft Regulations will be laid before Parliament by the end of this month and will come into effect on 6 April 2011.
The Government has stuck to its original proposal that, from 6 April 2011, employers will no longer be able to issue notices of retirement under the DRA procedure. In practice, notices must be issued by 30 March 2011 as the current procedure requires employers to give no less than 6 and no more than 12 months notice of retirement. Notices can be issued after 30 March 2011 and before 6 April under the short notice provisions but the employee could claim compensation of up to 8 weeks’ wages as a result. Where notifications have already been made prior to 6 April 2011, employers will be able to continue with retirement procedure, as long as the retirement is due to take place before 1 October 2011. Retirement notices already issued which provide for a retirement date on or after 1 October 2011 will be void.
No retirements using the DRA procedure will be possible from 1 October 2011. After that date it will only be possible to retire a particular employee at a particular age if the employer can objectively justify that age for retirement. This will be very difficult to do other than in particular professions (such as those requiring significant physical fitness) and will require substantial supporting evidence.
Most importantly for employers, the Government has responded to employer concerns (as communicated by us in our response to the consultation) as regards group risk insured benefits (such as medical insurance, death in service and income protection). The Government’s proposal is to provide an exemption so that employers will be able to exclude employees aged over 65 (such age rising in line with increases in the State Pension Age) from benefits under these schemes, without risk of age discrimination claims being brought. This has been a particular concern for our clients, and so it will come as a relief to many employers who will be able to continue to operate existing schemes without incurring inflated costs. We await the draft Regulations to determine which schemes will be captured by the exemption.
ACAS has now issued guidance for employers “Working without the default retirement age.” While this has been designed to assist employers rather than set statutory guidelines, we recommend that all employers read this carefully. In addition to the new ACAS guidance, the Government recommends that employers look at the guidance already available through the Age Positive Initiative. This gives information on how to review retirement practices, manage performance and flexible approaches to retirement without the use of a fixed retirement age.Continue Reading UK Government’s final decision on plans to phase out the default retirement age