For those of you who have been on holiday for the last few weeks, I sincerely hope that you have recovered your strength as you will need it over the next 12 months! The government is going to abolish the state retirement age! What does this mean, I hear you cry? Well, essentially, my view is that every employer will be forced to do one of three things after the abolition of the state retirement age. The first option is to institute a company retirement age and ensure that it forms part of the employees' contracts of employment; the second, to implement a non contractual retirement policy; the third is to abstain from any written contract or policy and treat each employee on a case by case basis. It should be noted that an employer may well be liable for unfair dismissal and age discrimination if he fails to implement a retirement properly.
If an employer were to require its employees to enter into a contractual arrangement whereby the employee would retire at a certain age then this contractual term would have to be objectively justified as it would be potentially discriminatory on the ground of age. Justification in discrimination cases is a very high hurdle to surmount. In order to enforce retirement, an employer would have to show that the term was a proportionate means of a achieving a legitimate aim; not an easy task. In many cases of age discrimination, the employer has shown that it has a legitimate aim, for example the promotion of younger members of staff and the employment of graduates, but the means of achieving that aim (i.e. the enforced retirement of an individual at a fixed age) are often found to be disproportionate. A constant review of the contractual retirement age of a company's employees is a must in order for the clause not to be found to be discriminatory, as is constant review of the circumstances and needs of the business. It will require thorough and efficient HR management in order to be an effective tool in the retirement of the workforce. Let us not forget that, in certain circumstances, it is a genuine occupational requirement that an employee is younger and this will be sufficient for the setting of a retirement age as long as it is a proportionate means of achieving a legitimate aim.
A non-contractual policy may be the answer to the retirement of employees. Such a policy could be bespoke to the business needs of the company and could take the form of a moratorium for both employer and employee once the employee passes a particular age. For example, once an employee has passed the age of 65 (or the state pension age), the employee will become eligible for retirement and the employer will consult with him or her in relation to it. If both parties wish for the employee to carry on working then they will do so subject to six month reviews (which will need to be justified but could potentially be on the grounds of health and safety or competence depending upon the type of role). If, at the state pension age or at a review the employer wishes to retire the employee then the employer may do so with notice but must justify the retirement at that point. This would need to be compliant with what ever statutory framework is in operation at the time, but would potentially be a legitimate way of retiring an employee and is not a million miles away from the current system.
An employer may take the view that they do not need a contract or policy in place in respect of retirement and will just deal with each case as and when the issue arises. This could pose problems as neither party will have applied much thought to the process, however, as long as the employer applies a rigorous test to the retirement of the employee, can justify it and dismisses reasonably and fairly, he will be seen to have acted in accordance with the law. If not, then he may be liable for unfair dismissal and age discrimination.
All in all, the next 12 months are going to be very interesting and I sincerely hope that the Government approaches the issue rationally and gives us all statutory guidance in how to institute retirement dismissals, otherwise we will see a massive rise in litigation in this area.
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This month's news:
1. no to compulsory retirement at 65 says the government
Subject to complying with certain conditions, under current law employers can lawfully require employees to retire at age 65 - commonly called "the default retirement age".
If it were not for a special rule in the Age Discrimination rules this would be a breach of the regulations (the Employment Equality (Age) Regulations 2006, SI 2006/1031) and would be likely to be unfair dismissal as well. When the then government introduced those regulations it promised a review in 2011, later announcing that it was bringing the review forward to 2010. The new coalition government is fulfilling that undertaking and has announced a consultation. The consultation expires on 21st October 2010.
2. yes to compulsory retirement at 65 says the Court of Appeal
As noted in our last item, on the same day as the government announced its plans to abolish the default retirement age, the Court of Appeal handed down a judgment holding that (on the facts of the particular case before it) a partnership was justified in requiring a partner to retire at age 65. The partnership concerned had therefore acted lawfully and was not in breach of the Age Regulations.
3. new National Minimum Wage from 1 October 2010
Regulations increasing the National Minimum Wage on 1st October 2010, and making other significant changes to it, have now been made (the National Minimum Wage Regulations 1999 (Amendment) Regulations 2010, SI 2010/1901).
4. public sector redundancy pay and pensions
It seems that a serious row is brewing over cutting the cost of public services by reducing numbers of Civil Servants. This post attempts to explain some of the legal background.
Civil servants are not entitled to statutory redundancy pay. Instead they have their own, generally more favourable, arrangements under the Civil Service Compensation Scheme ("CSCS") set up under the Superannuation Act 1972 . The last government proposed amendments to the CSCS, intending that changes would apply from 1st April 2010. The amendments were to be made with a view to reducing the benefits receivable in some cases by civil servants who are made redundant, are compelled to take early retirement or are dismissed on grounds of structural reorganisation or in similar circumstances.
5. health questions in recruitment after 1 October
A new law (the Equality Act 2010 s.60) will soon make it unlawful for a prospective employer to ask a job applicant about his or her health before offering work. In fact this goes wider than just "employers" in the technical sense - it covers applications for a position as a partner, as a contract worker, as a pupil barrister or for a personal or public office and, interestingly "membership of a stable". "Offering work" specifically includes making a conditional offer of work.
6. compensation payments and tax
The general purpose of an award of compensation by an employment tribunal is to put a wronged employee, so far as possible, in the same financial position as he would have been in if he had not been wronged. It is well established law that if an award of damages or compensation would be tax free whereas the money for which it is compensation would have been subject to tax, the damages or compensation must therefore be reduced accordingly. If it were not so the wronged employee would make a windfall profit (technically, this is known as the "Gourley principle" after the name of the 1956 House of Lords case in which the rule was established).
7. costs in employment tribunal cases
There was a useful reminder in the Employment Appeal Tribunal recently of the differences between tribunals and courts when it comes to awarding costs.
As is well known, the general rule in the Courts is that "costs follow the event" - in other words, the winner of a case is usually entitled to an order that the other party pays not only any damages awarded but also the winner's reasonable legal costs of the winner.
Employment tribunals (and the EAT) work differently.
8. flexible working (extension)
The legal right for employees of more than six months standing to ensure that requests they make for flexible working arrangements (such as part-time work or working from home) are taken seriously by their employers was introduced in 2003. Originally the right was only for parents and others (such as guardians) who were responsible for looking after children aged under 6 (or under 18 if the child is disabled) but it has been gradually extended.
9. employment law to hit the big screen
Employment law is due to hit the big screen in the UK on 1st October.
The Equal Pay Act 1970, the first modern piece of anti-discrimination legislation, may not sound like the stuff from which box office hits are made. However the events which led up to it have inspired a major new film, "Made in Dagenham". The UK premiere is timed for 1 October 2010 to coincide with the likely date for the repeal and replacement of the 1970 Act by the Equality Act 2010 (the USA premiere is not due until November).
10. a little light refreshment
Our final item in this month's newsletter is slightly off topic but will hopefully provide you with a little entertainment if you have a few spare minutes.
In late July 2010 Google announced that it has launched an online directory of all major US judgments from Federal to Supreme Courts (Google Scholar). This is an expansion of a beta version they have been running for a couple of years. Included in the judgments are the downright bizarre such as the following examples of judgments delivered in (not very good) verse!
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