Springhouse Solicitors

Will I be able to retire my employees?

With the end of the legal retirement age of 65 now on the horizon, employers are beginning to ask themselves When will I be able to ask my employees to retire ?

Currently it is relatively easy to dismiss an employee because they have reached the age of 65 without breaking the law, provided the right procedures are followed. This is because there is a default retirement age of 65.

But the government has promised to get rid of the default retirement age, starting in April 2011.

Once this has happened it will only be possible to bring the employment to an end for one of the set legal reasons: performance, conduct, capability, redundancy or some other substantial reason.

It will also be possible to stick to a retirement age in a contract when this is objectively justified.

Otherwise, if you dismiss someone because they are 65 after the rules have changed it is highly likely to result in unfair dismissal as well as age discrimination!

A recent court decision has given some guidance as to what might amount to objective justification of a retirement age of 65. The claim was brought by a partner of a law firm (the case is Seldon v Clarkson Wright and Jakes). Where there is a partnership there is no default retirement age. The court decided, however, that the following were legitimate aims; giving junior employees the opportunity to aspire to senior positions; enabling the business to plan ahead with certainty as to when people will be leaving; and creating a congenial culture where senior people did not need to be performance managed out of their job.

The real difficulties started once the legitimate aims had been shown. It was then necessary to prove that a retirement age of 65 was a proportionate way of achieving them. At the time of this decision there was a default retirement age of 65. The court used this as a reason for deciding that the age of 65 (as apposed to 66 or 67 for instance) was proportionate and therefore legal.

However, this will not be possible, presumably, once the retirement age has been phased out. And another case has decided that a retirement age of 65 for judges was not justified, where the aim was to achieve a “reasonable flow” of new appointments.

To begin with, when the new rules come in, employers would be well advised to rely on performance, capability or some other substantial reason rather than try to justify a compulsory retirement age!