01 September 2010
For company bosses, when an employee reached 65, it used to be very simple. Retirement beckoned, there was a whip-round in the office, a fond farewell speech and the requisite gift of a carriage clock.
Today though, it's all changed and the situation for employers is a good deal more complicated. The Government's announcement in late July that it plans to scrap the Default Retirement Age (DRA) from 2011 has left many questioning whether they will be forced to keep older workers on their books, instead of simply letting them enjoy a dignified goodbye.
Adding to the confusion is a ruling made by the Court of Appeal just 24 hours before the Government's announcement was made public. The judgment concerned the case of Leslie Seldon, a partner with solicitors Clarkson Wright & Jakes (CWJ) who had challenged his own forced retirement from the practice when he reached 65, claiming it was unlawful.
As a partner rather than an employee, the DRA hadn't applied to Mr Seldon and CWJ defended their stance by saying his retirement was justified because it was a way of achieving a legitimate aim – providing employment prospects for younger people and good promotion prospects.
The Court of Appeal agreed with CWJ's argument and the two decisions, which on the face of it appear to contradict each other, have left many employers feeling somewhat perplexed.
On the one hand the Government has decreed people shouldn't be forced out of employment simply because they have reached a particular age; and on the other, the Court of Appeal has endorsed a justification defence which can be adopted by most businesses.
Reassuringly, Jo Davis, partner and employment practice group leader at leading Buckinghamshire legal firm B P Collins and who represented Mr Seldon in his court case, says there's no need for employers to panic.
"In making this decision, the Court of Appeal may have provided employers with a life raft because they may be able to maintain a default retirement age within their organisation if they choose to do so," she said.
"The big difference is that when the DRA is removed next year, employers can be challenged in court to show that their retirement age is objectively justified. It won't be easy, but we believe many employers will be able to justify the retirement of people where they can show there is competition to get into those jobs."
Davis admits that the level of justification employers are able to provide may depend on the seniority of the person in question. After all, she says, if an individual due to reach 65 is in a senior managerial role, then it will be easier for an employer to show that others within an organisation aspire to take over. This becomes more difficult if the individual is in a more junior role and puts a questionmark over whether there is a legitimate aim to succeed.
This is especially pertinent for organisations with large numbers of employees, where employers may even want to consider if they need to have different retirement ages for different levels of seniority.
"What our examples show is that the scrapping of the DRA isn't straightforward, not least because of the Court of Appeal ruling," she added. "We know that employers are concerned about the changes and how they can effectively manage their workforce. Our message is that, with the right advice, it is still possible to keep a retirement age in force, providing you can justify its means.
"With our expertise and experience we are very well placed to offer the right support and guidance. We would urge anyone who is concerned about how to manage the transition of the scrapping of the DRA, and who is considering whether or not they should keep a retirement age in place to enhance future promotion and employment prospects for younger staff, to come and talk to us."
The employment law team at B P Collins will be hosting a seminar at the beginning of October, focussing on Age Discrimination in the workplace. For full details, visit the events page.
Jo Davis can be contacted on 01753 279029, complete the online enquiry form or email employmentlaw@bpcollins.co.uk.
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