“When I'm sixty four….”

From 1 October 2006, the process of retiring an employee will become radically different with the coming into force of the Employment Equality (Age) Regulations 2006. The changes – which will require a considerable shift in thinking and approach – will most obviously affect HR managers. However, where an employer operates an occupational pension scheme there will be additional factors to consider, the implications of which may be more far-reaching than at first appears. HR and pensions professionals alike will need to be alive to all these issues if claims under the Age Regulations are to be avoided.

Planned retirement – what is it, and why is it important?

The framework set out in the Age Regulations places immense importance on planned retirement. Where an employer:

• sets an intended retirement date in advance (at or beyond the employee’s 65th birthday),
• notifies (or reminds) the employee at the specified time of that date and of the employee’s right to request to work beyond that date, and
• follows the appropriate procedure for considering any request received from the employee,

the employer will not face liability for age discrimination by retiring the employee on the intended retirement date, even though the reason for dismissal is, effectively, the employee’s age. In addition, the employer will also be deemed to have dismissed fairly.

In contrast, an employer who misses out any part of the above process – perhaps one who relies simply upon the statement of normal retirement age set out in the employee’s contract, or who retains an unjustifiable normal retirement age below 65 – is at risk of not only an unfair dismissal claim but also an age discrimination claim, with potentially unlimited liability.

In a case where the employee is able to persuade the tribunal that he or she would have succeeded in negotiating an extension to the employment relationship if only the employer had followed the appropriate procedure, losses could be substantial, since older workers will be at a distinct disadvantage when seeking alternative employment. This is particularly the case for workers aged 65 or over, because under the Age Regulations, it is perfectly lawful for employers to refuse to hire applicants in that age group.

It pays, therefore, to get the procedure right.