Partner Article

Blacks Solicitors LLP on handling retirement of employees

Euan Lawrence, Solicitor at Blacks Solicitors LLP is an expert in employment law and here he sheds some light on how employers can manage the retirement of their employees following the recent abolition of the default retirement age

For many businesses, employment law can prove a minefield, especially when trying to keep up with changes and amendments to legislation - and one area which has been subject to such revisions is retirement.

April 2011 saw the removal of the default retirement age of 65 and the statutory retirement provisions, which governed how companies could compulsorily retire employees. Since this time, employers in the UK have had to accept that forcibly retiring members of staff (i.e. dismissing them when they hit a particular age) could lead to exposure and a claim for age discrimination - not a situation that any business owner wants to find themselves in.

A lack of understanding has led to this being seen as a ‘grey area’, with many business owners struggling with the do’s and don’ts surrounding employees of a certain age. However this lack of understanding has led to business owners not being aware of the fact that, potentially, they can still impose a retirement age provided they have reasonable and legitimate justification for doing so. As well as encouraging younger members of staff to stay on in the hope of promotion, a potentially legitimate aim for a retirement age could be preserving the “dignity” of older workers – for example, avoiding the indignity of older members of staff being regularly subjected to performance management.

If dismissal by reason of retirement is to be justified, then the employer will also need to follow a fair process and, as a minimum, should give employees “adequate notice” of impending retirement” and, if circumstances permit, give consideration to any request the employee might make for working on beyond retirement.

Clearly there are a number of issues facing any company seeking to retire staff. However, we would not recommend that companies simply rule out retirement as an option without first considering its potential application.

Key points to consider:

What is the purpose of the company having a retirement age? This is vital question for

• companies to answer well before any employees are retired and is one that employment tribunals will expect employers to have given consideration

• What should the normal retirement age be? Employers should properly consider their retirement age, given their ultimate objective. Should it be 65 (as was previously the national default retirement age) or should it be higher (or, indeed, lower)? Any statistics or evidence that a company can show it reviewed when establishing the retirement age will be useful in proving to an Employment Tribunal that the retirement was justified

• Employers need to review their employment documentation (employment contracts and staff handbooks) to ensure that these accurately set out the company’s position in relation to retirement age and the procedures which will be followed by the company in forcibly retiring members of staff

• Companies need to take specialist legal advice when considering retiring any staff. This is an issue which leads to a large amount of litigation in the Tribunals and the Courts. Companies should only retire employees after they have been properly informed about their rights, responsibilities and the potential risks involved

There are multiple considerations surrounding retirement as outlined above and it is essential that this is handled correctly and sensitively. The very best thing to do is to seek legal advice on what steps your business needs to take to ensure it stays the right side of the law – so always ask the experts and let them worry about the detail.

This was posted in Bdaily's Members' News section by Blacks Solicitors LLP .