Handling retirement and avoiding allegations of direct age discrimination

by Lucy Duane on May 12, 2013

  • SumoMe

Aged 71, Sir Alex Ferguson has announced his retirement as Manchester United FC’s manager. Today, he watched the Team win at the Theatre of Dreams and lifted the Premier League trophy before he bows out on his 26 year tenure at the Club, next week.

Sir Alex’s decision to retire was consensual but rewind a couple of years, and Sir Alex could lawfully have been forced to retire owing to the national default retirement age (‘DRA’) of 65.

However, on 6 April 2011, the law changed and the DRA was abolished.

A dismissal based on a person’s age now amounts to direct age discrimination under the Equality Act 2010 (EqA 2010), unless the employer can objectively justify it or can establish that being below that age is an ‘occupational requirement’.

So how should employers approach the sensitive issue of retirement in order to avoid allegations of direct age discrimination?

Employers without a fixed retirement age.

Many employers will have abandoned a fixed retirement age following the abolition of the DRA. Those employers will need to demonstrate, on a case by case basis, that they have acted fairly when deciding to retire an employee.

This is no different to the fair reason and fair procedures an employer should follow when deciding to dismiss an employee generally, regardless of age considerations.

Employers who choose to retain a fixed retirement age.

Despite the abolition of the DRA, it is open to employers to choose to retain a fixed retirement age. This is because, unlike other forms of direct discrimination under the EqA 2010, direct age discrimination can be objectively justified.

A fixed retirement age may be justified if the employer can show:

1. A legitimate aim is being met.

Case law suggests that the aim must have a social policy or public interest element: private aims, such as cost reduction, will not be sufficient.

Examples of legitimate aims taken from case law include:

1. Workforce planning.

2. Promoting recruitment and retention of younger employees.

3. Protecting the dignity of older employees by not requiring them to undergo performance management procedures.

4. Promoting the exchange of experience and innovation by having an age-balanced workforce.

2. Having a particular retirement age meets that aim.

The ‘social policy’ aim being relied upon must be relevant to the employer’s individual circumstances.

3. It is proportionate to use that retirement age as a means of meeting that aim.

Compulsory retirement must actually achieve the legitimate aim identified and should be applied consistently. The retirement age chosen should also be appropriate and necessary: employers should consider if an alternative method, such as competence testing, could be used instead of a particular retirement age.

ACAS Guidance

Whether they have abandoned a fixed retirement age altogether or else retained a fixed retirement age, all employers should read the guidance published by ACAS, Working without the default retirement age.

The guidance is intended to help employers deal with issues caused by the abolition of the DRA and to avoid allegations of direct age discrimination.

ACAS recommends a relatively cautious approach that enables employers to gather information about an employee’s future short, medium and long term plans. Such workplace discussions allow the employer to gauge training or development needs and to discuss future work requirements with the employee.

Finding out about employees’ plans for the future is a useful process that should not be limited to older employees and it is suggested that workplace discussions be carried out as part of an annual appraisal process, as a minimum.

Whilst employers do not have to treat people of different ages identically, employees should be treated fairly and consistently ensuring that there is not more favourable treatment of an employee because of their age. Workplace discussions therefore do not have to be uniform, however, employers must avoid questions or comments which could be seen as discriminatory, on any ground.

The age of an employee should not be of concern to employers, per se. However, employers will wish to plan for the inevitability of their eldest employees leaving the business. The ACAS Guidance is useful to employers in that regard and should be followed, as far as possible.

Lucy Duane
I am a qualified Employment Lawyer with experience advising clients on both contentious and non-contentious employment law matters. I am currently an Associate at Fasken Martineau LLP. For more blog posts visit: www.employment101.co.uk Please follow me on Twitter: @Employment_101
Lucy Duane
Lucy Duane

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