Bosses who stick to fixed retirement age beware
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Employers who stick to a fixed retirement age will in
future be at risk of claims for unfair dismissal and age
discrimination.
They will have to prove the retirement age was a 'proportionate
means of achieving a legitimate aim' - a difficult test to
satisfy.
Legitimate aims may include health, safety and welfare;
employment and work force planning; facilitating the recruitment
and retention of younger employees; contributing to a pleasant and
supportive workplace, and protecting the dignity of older employees
by not asking them to undergo performance management procedures;
training requirements, and the extra costs of employing older
workers.
If you can establish one or more of these criteria you will then
need to justify that the retirement age imposed was proportionate.
This means proving:
* Why you chose the retirement age as the appropriate cut off
point - for example: evidence of declining performance after a
certain age.
* That there was no reasonable alternative - such as using
fitness or competency tests rather than a specified retirement
age.
* That you have applied the retirement age consistently.
For unfair dismissal purposes, if objectively justified, the
retirement dismissal will be for some other substantial reason.
In the absence of a fixed retirement age, you will have to
rely on one of the remaining five reasons under the Employment
Rights Act 1996 for a potentially fair dismissal: conduct,
capability (relating to declining health and / or performance),
illegality, redundancy or some other substantial justification.
You will also need to prove you acted fairly from a procedural
perspective and that any dismissals are not tainted with age
discrimination.
An Acas document called 'Working without the Default Retirement
Age' gives further guidance.
The government has said it will provide an exemption that
enables employers to withdraw group risk insured benefits such as
private health insurance, death in service and private healthcare
schemes for employers at, or over, the age of 65.
But it is given a strong indication that it doesn't intend to
make any legislative changes in respect of share schemes, and
considers it is for employers to decide whether the rules of the
scheme define someone as a 'good leaver' or a 'bad leaver' if they
retire.
Finally, the abolition of the DRA doesn't affect the setting of
a normal retirement age as far as occupational pension schemes are
concerned.
Monday, June 13 2011
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