Retirement 


Employers are no longer allowed to force employees to retire at 65 (or any other age). The only exception is where there is a contractual retirement age in place that can be objectively justified by the employer as a proportionate means of achieving a legitimate aim. Compulsory retirement is directly and indirectly age discriminatory and must be justified objectively. 


Until it was abolished on 6 April 2011, there was a “default retirement age” (DRA) in place which allowed employers to force employees to retire at 65 provided they followed a statutory procedure. Since the abolition of the DRA, employers who want to forcibly retire employees at a particular age must be able to point to a valid and non-discriminatory contract term containing a contractual retirement age. This will be in the statement of employment particulars, incorporated from a retirement policy or collective agreement, or more rarely, established through custom and practice (see Chapter 3). 


A contractual retirement age will be discriminatory unless the employer can demonstrate that it is a “reasonably necessary means” of achieving a legitimate aim at their workplace (HM Land Registry v Benson [2012] ICR 627).


Only broad social policy aims in the public interest, such as employment policy, labour market or vocational training aims, can be used to justify direct age discrimination, and this includes compulsory retirement. An employer is not allowed to justify direct age discrimination by relying on “purely individual reasons particular to the employer’s situation, such as cost reduction or improving competitiveness” (Seldon v Clarkson Wright and Jakes No.1 [2012] UKSC 16). 


In Seldon No.1, the Court identified two broad categories of “public interest” aim capable of justifying a discriminatory retirement age. These are:


• aims that promote intergenerational fairness: including making it easier for young people to access the workforce and progress, enabling older workers to plan properly for retirement, sharing limited promotional opportunities between generations, facilitating workforce planning, promoting diversity and the exchange of ideas and experience, and recognising that older workers have already benefited from the fixed retirement of their older ex-colleagues; and 


• aims that promote dignity: including avoiding the need to dismiss older workers on grounds of incapacity or under-performance. However, national charity Age UK has pointed out that this “aim” is itself based on outmoded stereotypical assumptions about the performance of older workers.


The need to secure the health and safety of workers and the public is a legitimate aim. However, in general, employers should avoid making stereotypical assumptions about workers’ physical and mental fitness based on age if there is a more proportionate alternative available, such as a policy of regular health check-ups for each worker past a certain age. 


In Seldon v Clarkson Wright & Jakes (No.2) [2014] IRLR 748, the EAT ruled that a retirement age of 65 was legitimate, even though the employer could have opted for later ages, say 66 or 67. However, it is worth remembering that when Mr Seldon first launched his challenge to compulsory retirement, there was still a DRA of 65 in place. By contrast, in today’s workplace, many more people expect to need to work beyond age 65. 


It is not enough for an employer simply to assert a set of “legitimate aims” behind a compulsory retirement policy. Instead the employer should be able to demonstrate, using proper evidence, that compulsory retirement is both appropriate and reasonably necessary to meet the needs of their own workforce. Tribunals are not supposed to “micro-manage” an employer’s policy decisions by scrutinising them too closely (Chief Constable of West Midlands Police & Ors v Harrod & Ors [2015] UKEAT/0189/14/DA). However, tribunals will expect to see solid evidence from the employer to justify the policy. 


Here are some important factors to bear in mind when negotiating over a contractual retirement age:


• employers should be able to back up assertions with evidence. For example, an employer who suggests that promotional opportunities for younger workers are being held back by the presence of older workers should be able to produce evidence showing this. If there has never been a problem with recruiting and promoting young people, the employer may struggle; 


• the needs of the disadvantaged group should be taken into account when devising any retirement policy. For example, a change to the retirement age is more likely to be reasonable where those affected have been given enough advance notice to plan for the future (European Commission v Hungary [2012] EUECJ C-286/12); 


• a retirement policy negotiated through collective bargaining is more likely to be judged proportionate and reasonable than one that has been imposed on workers (Seldon No.1, Loxley v BAE Systems (Munitions & Ordinance) Limited [2008] ICR 1348);


• the availability of an adequate pension income for someone who is forced to retire is likely to be a relevant factor (Rosenbladt v Oellerking Gebaudereinigungsges mBh [2010] EUECJ C-45/09, Chief Constable of West Midlands Police & Ors v Harrod & Ors [2015] UKEAT/0189/14/DA); and


• a reasonable policy should provide a right to request not to be compulsorily retired. 


Reps should be alert to the risk that some employers may respond to restrictions on forced retirement by misusing formal capability and performance review processes to force out older workers. 


“Flexible retirement” is supported by the TUC and the Chartered Institute of Personnel Development. In some workplaces, unions have negotiated flexible retirement agreements. For examples, see the LRD booklet Representing older workers — a guide for trade union negotiators (www.lrdpublications.org.uk/publications.php?pub=BK&iss=1676).


In June 2014, the right to request flexible working was extended to all employees with 26 weeks’ service. The ability to ask to work flexibly is likely to be particularly useful to employees planning retirement. For details, see Chapter 9.