Can An Employer Still Retire An Employee?

I was discussing with a colleague the lack of cases of note relating to age discrimination – which is surprising when you consider that everyone has an age. Then, like the proverbial buses, in the space of a couple of weeks we saw David Dimbleby call for cultural shift at the BBC over the discrimination of older women, John McCririck suing Channel 4 for age discrimination and a ruling that it was permissible to justify a mandatory retirement age of 65.

For those of you unfamiliar with the background; up until April 2011, it was permissible to retire employees at the age of 65. This was viewed by employers as a convenient method of releasing older workers without the scope for upsetting them or paying redundancy payments. However, under the new rules, a dismissal by reason of retirement will amount to age discrimination unless it can be “objectively justified”.

The new regime was not well received by the majority of employers. Previously, if an employee was aged 65 or over and their performance began to deteriorate, retirement was used as a method of letting the employee down gently, and allowing them to leave the organisation with their head held high. Nowadays, employers are faced with the uncomfortable task of tackling older workers if their performance deteriorates – these conversations are difficult for employers and can be demoralising for the employees concerned.

On the flip side of course, the new rules were welcomed in some quarters where unscrupulous employers were accused of using retirement as a “get out of jail free card” when it came to the dismissal of older works. If an employee is aged over 65 and still able to perform their role, why should they be retired?

Employers have been wrestling with these issues for the last two years, but very few have taken the plunge and attempted to justify a default retirement age. I expect this is because of the early decisions which came down in the favour of employees. The case of the football referees was one such case which received significant media attention.

In that case, four football referees were dismissed at the age of 48, by reason of retirement. The employer attempted to rely on 48 as the default retirement age on the basis that this was the age at which fitness levels, and consequently performance, began to deteriorate. However, the Employment Tribunal ruled that a default retirement age of 48 was not a “proportionate means of achieving a legitimate aim” – why 48 and not 45 or 50?

Next, we had the case of Mr Seldon – a Partner at a law firm. Mr Seldon was forced to retire at the age of 65 because this was the default retirement age set by his employer. The Tribunal, EAT and Court of Appeal struggled with this issue - why 65 and not 60 or 70. Mr Seldon’s case was eventually heard before the Supreme Court and then remitted to a fresh Tribunal. This month, the Tribunal found in favour of Mr Seldon’s employer –  it  held that retention, collegiality and planning were all legitimate aims, and that a mandatory retirement age of 65 was a proportionate method of achieving them!

Will this decision lead to an opening of the flood gates? Will we employment lawyers receive a torrent of instructions relating to the introduction of a default retirement age – I think not! The case was fact sensitive and based on the demographics of society in 2006 – ie pre the abolition of the default retirement age. My advice to employers remains the same, it is a huge risk to attempt to justify a default retirement age. My preference is to adhere to best practice which includes the regular review of employees’ performance, identification of areas of concern and providing training and/or support where required.

James Twine, Partner, Head of the Employment Team.
01752 292351