Advice & information • Employment law

Age discrimination and retirement

Since October 2006, it has been unlawful to discriminate against employees on grounds of age — which can be particularly problematic with regard to retirement age.

The Employment Equality (Age) Regulations 2006, which came into force on October 1, 2006, state that unjustified indirect age discrimination and direct age discrimination will be unlawful whenever that occurs in the course of employment, whether that be at the beginning, during or at the end of the employment relationship.

The most obvious situation in which there will be a potential age discrimination case is when an employee reaches compulsory retirement.

The regulations set a default retirement age of 65 and retirement that takes place at or after the age of 65 will be lawful and will not amount to age discrimination, provided certain procedural requirements are followed.

Employers would, however, have to justify a retirement under 65 and it is likely that such justification will only be possible in exceptional circumstances.

NORMAL RETIREMENT AGE

Both unfair dismissal and age discrimination, whether or not the reason for dismissal is retirement, are determined in accordance with new provisions in the Employment Rights Act 1996. These provide as follows:

1. Where there is no normal retirement age, a dismissal before the age of 65 cannot legally be by reason of retirement.

2. Where there is no normal retirement age, a dismissal at or after the age of 65 will be by reason of retirement if the employer has given the employee notice complying with the set procedure and the contract terminates on the intended date of retirement.

3. Where there is a normal retirement age, a dismissal before that age cannot legally be by reason of retirement.

4. Where there is a normal retirement age of under 65, a dismissal will be by reason of retirement if the retirement age can be justified objectively and the employer has given notice in accordance with the required procedure as set out below.

RETIREMENT PROCEDURE

The following steps must be taken:

The employer must advise the employee in writing, not more than 12 months and not less than 6 months before the intended retirement date, that it intends to retire the employee on that date and notify the employee that he or she has the right to request continued employment beyond that date.

If the employee wishes to continue working beyond that intended retirement date, he or she must make a written request to stay on. This request must be made not more than 6 months and no less than 3 months before the retirement date. The employee must state whether the request is to stay on indefinitely, or for a fixed period. The employee can only make one request in relation to a retirement date.

The employer must hold a meeting with the employee within a reasonable time to consider the employee’s request. As soon as reasonably practicable after the meeting, the employer must notify the employee in writing of its decision, whether that to be to agree to the request, to refuse, or to allow the employee to remain in employment but for a period different from that requested.

The employee has the right to appeal against the decision and must do so as soon as reasonably practicable after the date of the decision.

The employer must convene a meeting to hear the appeal within a reasonable period of receiving notice of it and must notify the employee of the decision in writing as soon as reasonably practical after that meeting.

The employer is under no obligation to give any reason for rejecting the request to remain in employment beyond the intended retirement date. A refusal could be challenged on grounds other than age — for example, on grounds of disability discrimination, particularly where medical issues have contributed to the decision to refuse the request to work beyond retirement. It is therefore sensible for employers to give a reason for refusing requests.

Further information

It is vital employers that realise they must follow the formal retirement procedure. For further advice or information, please contact Richard Maloney.