In the 1890s about two thirds of males over 65 were ‘gainfully occupied’. This fell to 50% in the 1920s and by the 1980s was less than 10% about half of whom were part time. Today this trend has almost certainly been reversed due to improvements in health and problems with obtaining adequate pensions.
An employee can decide to retire at any age. Subject to giving the appropriate period of notice the employee simply leaves when they want to retire.
Difficulties only arise when an employer wants an employee to retire but the employee wants to carry on working. If agreement cannot be reached the employer may decide to dismiss the employee. The question is in what circumstances that dismissal will not be both age discrimination and unfair dismissal.
If the employee is incapable of carrying out their duties then their employment may be fairly terminated. The employer will have to carry out a proper procedure and the employee the opportunity of trying to persuade the employer they should not be dismissed. Provided the employer does carry out a proper procedure the ultimate decision is that of the employer. This tends to be unpopular with employers who may see compulsory retirement as a more dignified way of parting with a longstanding employee than using disciplinary procedures.
For the next few months an employee who is perfectly capable of doing the job can still be fairly dismissed if they reach the compulsory retirement age and the employer follows the specified procedure.
The employee’s employment contract may specify a certain age for retirement but there is no need for a business to have a compulsory retirement age. Only a small minority of employers, especially SME’s, apply mandatory retirement ages. If a business does it can be set at any age but a compulsory retirement below 65 is unlawful unless objectively justified. Compulsory retirement under the age of 65 (or an earlier justifiable retirement age) is automatically unfair.
If the business does not fix a retirement age it will be assumed to be 65. Allowing a compulsory retirement age can be seen as undermining the principles behind preventing age discrimination which was introduced in October 2006. The government has announced that this default retirement age will be scrapped from 1 October 2011. After then any compulsory retirement age will have to be justified.
Some commentators, including the Employment Lawyers Association, think this change will produce a glut of compulsory retirements in 2011.
It is not possible to have different retirement ages for men and women.
For the time being an employer can compel an employee to retire when they reach the default retirement age of 65 or the compulsory retirement age for that business if the employer follows the statutory retirement procedure:
- between 6 and 12 months before the intended retirement date the employer must notify the employee in writing of the date and their right to request to work beyond that date if they want;
- if the employee wants to continue working they have to make a request between 3 and 6 months before the intended retirement date;
- if the employee makes a request to continue working the employer should meet with them to discuss it;
- the employer can decide whether or not to accept the request and doesn’t need to give reasons for their decision. The decision must be given to the employee in writing;
- if the request is refused the employee has the right to appeal;
- the employee has the right to be accompanied at any meeting to discuss their retirement and any subsequent appeal meeting.
If the employee’s request is refused the employer can give the employee notice confirming their retirement on the compulsory retirement date. The termination of the contract of employment in accordance with that notice will be a fair dismissal and won’t be age discrimination.
Compulsory retirement at the compulsory retirement age is automatically unfair if the statutory retirement procedure is not followed. It will probably also give rise to a claim for age discrimination for which there is no upper limit to the compensation an Employment Tribunal can award.
Under the proposals for abolishing the default retirement age employers will not be able to give a notice requiring compulsory retirement after 6 April 2011. After that date employers will only be able to dismiss employees under the ordinary unfair dismissal rules unless they can objectively justify a compulsory retirement age for their business.
