Retirement

Employers are not allowed to force employees to retire at 65 (or any other age), unless there is a contractual retirement age in place that can be objectively justified as a proportionate means of achieving a legitimate aim. Compulsory retirement is both direct and indirect age discrimination and must be justified objectively.

Until 6 April 2011, there was a “default retirement age” (DRA) in place. This enabled employers to force employees to retire at 65, as long as they followed a statutory procedure. The DRA has now been removed. As a result, employers who want to forcibly retire employees at a particular age must be able to point to a contract term containing a contractual retirement age. This will be either in the written contract document or incorporated from a policy or collective agreement, or more rarely, established through custom and practice (see Chapter 3).

A contractual retirement age amounts to both direct and indirect age discrimination. This means that for the contract term to be lawful, the employer must be able to justify it as a “proportionate means of achieving a legitimate aim”.

In Seldon v Clarkson Wright and Jakes (a partnership) [2012] UKSC 16, the Supreme Court confirmed that following European law, only aims based on social policy and public interest objectives, such as employment policy, the labour market or vocational training, can justify direct age discrimination. It is not possible to justify direct age discrimination by relying on “purely individual reasons particular to the employer’s situation, such as cost reduction or improving competitiveness”.

In Seldon, the Court identified two potential categories of legitimate “public interest” aim capable of justifying forced retirement. These are:

• aims promoting intergenerational fairness: including making it easier for young people to access the workforce and progress, enabling older workers to remain in the workforce or plan properly for retirement, sharing limited promotional opportunities between generations, promoting diversity and the exchange of ideas and experience and recognising that older workers themselves benefited from the rule when younger; and

• aims promoting dignity: This includes avoiding the need to dismiss older workers on grounds of incapacity or under-performance, or to engage in expensive disputes. But as national charity Age UK has pointed out, this type of aim is much more controversial, since suggestions that older workers should be spared the “indignity” of performance appraisal are themselves based on outdated stereotypical assumptions.

Other job-specific legitimate aims can include demands for physical strength or alertness. However, employers should not make stereotypical age-based assumptions about physical and mental capability based on age to avoid carrying out periodic risk assessments and health checks.

It is not good enough for the employer simply to assert the presence of a legitimate aim. The employer must prove, with proper evidence including relevant statistics, that a compulsory retirement age is both appropriate and necessary to meet the needs of their particular organisation. In particular:

• the employer should produce proper evidence to back up its claims. For example, an employer who argues that promotional opportunities for younger workers have been inhibited by the continued presence of older workers needs to be able to prove this. An employer who has never had a problem recruiting and promoting young people will struggle to do so;

• the needs of the disadvantaged group must be taken into account. For example, a change to the retirement age is more likely to be reasonable where those affected are given enough advance notice of impending retirement to be able to plan (European Commission v Hungary [2012] EUECJ C-286/12);

• a policy that has been collectively negotiated is more likely to be seen as proportionate and reasonable (Loxley v BAE Systems (Munitions & Ordinance) Limited [2008] ICR 1348);

• the availability of a pension income may be a relevant consideration (Rosenbladt v Oellerking Gebaudereinigungsges mBh [2010] EUECJ C-45/09);

• just because an employer can justify a compulsory retirement age, it does not follow that it has to be 65, where a later age such as 67 or 70 would be just as effective at meeting the employer’s aims but less damaging to those affected; and

• to be reasonable, any policy should give the employee the right to request not to be compulsorily retired.

Reps need to be alert to the risk of employers using formal capability and performance review processes inappropriately to force out older workers who can no longer be retired. This would be unlawful age discrimination.

“Flexible retirement” is supported by the TUC and the Chartered Institute of Personnel Development. In some workplaces, unions have been able to negotiate flexible retirement agreements for their workers.

For more information, up-to-date guidance and examples, see the LRD booklet Representing older workers — a guide for trade union negotiators (www.lrdpublications.org.uk/publications.php?pub=BK&iss=1676).