Until recently, employers could retire any employee simply because they were aged 65 or over, pretty much without question. The only provisos were that employers gave at least six months' prior notice and that they considered any request by the employee to work on. This was known as the default retirement age (DRA). Although permitted by law, the use of the DRA did constitute discrimination on the grounds of age and as a result it has now been abolished.
Therefore, employers are now left with two options.
Option 1 - Have no fixed retirement age
Employers can abandon the use of fixed retirement ages altogether and allow employees to remain in work for as long as they want, provided they remain capable of doing their job. To help workforce planning employers should consider the use of regular appraisals and build into them discussions about the employees future aspirations and short, medium and long-term plans to establish their intentions.
But what happens to an employee who is unable or unwilling to retire voluntarily and whose performance or health has deteriorated significantly? Employers must deal with such a case in the same way for employees of all ages i.e. by the appropriate disciplinary, sickness absence or capability procedure. Therefore if the issues do not improve there may be a justifiable reason for dismissal.
Of course, as in cases such as this, the dismissal carries the risk of having to defend a claim before the employment tribunals should the employee be particularly unhappy.
Such risks can be minimised by adopting a proactive and robust approach to the management and measurement of performance and absence (which, of course, must be carried out in respect of all employees, regardless of age, as to focus solely on older employees will in itself constitute discrimination).
Option 2 - Retain a fixed retirement age
The abolition of the DRA removes only the automatic and unquestionable right to retire an employee because they are 65 or over. Employers can still choose to operate their own compulsory retirement age (whether that be 65 or any other age), but only if it can be objectively justified as being 'a proportionate means of achieving a legitimate aim'.
'Legitimate aims' may include workforce planning (for example, to ensure recruitment opportunities within the business), economic factors such as the need for efficiency, or other factors such as health, welfare and safety. To pass the proportionality element of the test, the discriminatory effect must be significantly outweighed by the importance and benefits of the stated aim and there must be no better, alternative way of achieving that aim.
Employers must be ready to justify a fixed retirement age should it ever be challenged. The issues would ultimately be determined before the employment tribunals, with the onus of proof lying squarely on the employer who must set out clear and robust evidence that compulsory retirement, and the particular age adopted, is or was the most proportionate way of achieving the stated legitimate aim. That will not be an easy task.
Summary
The removal of the DRA has replaced certainty with an element of uncertainty, whichever of the two options is adopted. The first option requires no immediate action, but improved management will be required throughout an employee's career (and in particular at the end of it) and it will introduce doubt as to the timing of a retirement.
The second option on the other hand provides certainty as to the timing of that retirement, but uncertainty as to whether it will in future be challenged by an affected employee and, if so, whether it will stand up to judicial scrutiny.
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