Know the facts about the default retirement age

From 5 April 2011, the law relating to retirement procedure changed. XpertHR smallbusiness offers the lowdown on how this affects salon owners.

When is the last date that employers can notify employees of retirement using the default retirement age?

The final date on which employers will be able to give between six and 12 months' notice of retirement using the default retirement age and statutory procedure is 5 April 2011.

What do employers have to do to comply with the statutory procedure in relation to any retirements that they notify by 5 April?

The statutory procedure requires the employer to inform the employee in writing of the date when their employment will terminate in relation to their retirement, and of the right to make a request to carry on working beyond the intended retirement date. The intended retirement date can be between six and 12 months from when the employer gives the notification.

Can employers issue a retirement notice using the statutory procedure for any older employee so long as they do so by 5 April?

No. The employee must already have reached 65 (or the employer's normal retirement age if this is higher), or be going to reach this age by 30 September 2011.

So when is the last intended date of retirement possible?

According to the Government, this is 5 April 2012, where the employer gives the maximum 12 months' notice on 5 April 2011.

What is the required process when an employee requests to continue working beyond their retirement date?

Unless the employer agrees to the request outright, it must hold a meeting to discuss the request with the employee. The employee has the right to be accompanied at the meeting by a colleague of their choice.

The employer must then let the employee know the outcome in writing. If the employer refuses the request, or agrees to extend the employment for a shorter period than requested by the employee, it must also inform the employee that they have the right to appeal. If the employee appeals, the employer needs to hold a further meeting before making a final decision.

If an employer agrees to an extension of employment, will it still be able to retire the employee safely?

If the employer agrees to an extension of six months or less, the retirement can go ahead under the statutory retirement procedure at the end of the extended period.

However, an indefinite extension, or an extended period of more than six months, would require a new notification of retirement and repetition of the statutory retirement procedure if the employer subsequently wanted to retire the employee. As it will not be possible for employers to give notification of retirement under the statutory procedure after 5 April 2011, if they agree to an extension of more than six months they will not then be able to retire the employee under the statutory retirement procedure.

Where an extension is agreed, what is the last possible date for a retirement under the statutory procedure?

According to the Government, the last date for a retirement to take place under the statutory procedure is 5 October 2012. This would be where the employer gave 12 months' notice on 5 April 2011 of a retirement date of 5 April 2012, and then agreed to an extension of six months.

How will employers deal with retirement after the abolition of the default retirement age?

Employers will still be able to operate a compulsory retirement age, but only if they can objectively justify it. The Government's proposals call these employer-justified retirement ages (EJRAs). To justify a compulsory retirement age, the employer must be able to show that it is a proportionate means of achieving a legitimate aim.

Employers that do not operate a compulsory retirement age may be able to carry out individual retirements on a case-by-case basis, but it will be difficult to justify such a retirement where the employer does not consistently apply an EJRA to all employees in similar roles.

An employer that wishes to retire an employee will also have to follow a fair procedure under the ordinary unfair dismissal rules. If the retirement is objectively justified, the dismissal will be deemed to be for 'some other substantial reason' under s.98 of the Employment Rights Act 1996. (See HJ 25-31 March 2011, pages 50 and 51, on dismissing staff).

After the abolition of the default retirement age, how should employers deal with employees over 65 who are underperforming?

An employer must not discriminate against an employee who is underperforming by disciplining or dismissing them on the grounds of age. The employer should deal with the employee in the same manner that it would an underperforming employee under the age of 65, by following a fair capability process that focuses on the employee's performance.