Abolition of retirement age – a dog’s breakfast in the making (with apologies to any discerning canines)

It seems I’ve been beaten to it this morning. Darren Newman has got there before me and said much of what I was going to say about the draft regulations on the abolition of the default retirement age, which were leaked (as far as I can tell, because they are as yet still not on any official government sites) yesterday and were round twitter like wildfire. But I’ll add my two-penn’orth anyway, now my blood’s up.

Compulsory retirement abolished (mostly)

The government has been planning for a while to repeal Schedule 6 of the Employment Equality (Age) Regulations 2006, together with corresponding provisions of the Employment Rights Act 1996 dealing with fairness in retirement dismissals.

The effect of those provisions is, in short, that an employer can force an employee over 65 (or the normal retirement age for that workplace) to retire without it being age discrimination or unfair dismissal, provided they have given them a notice in writing telling them of the retirement date and giving them the opportunity for a meeting to request an extension of their employment. The notice should be given 6-12 months in advance, to be on the safe side, but an employer can in theory get away with issuing it up to 2 weeks before the retirement date but face paying 8 weeks’ pay as compensation plus the additional risk of unfair dismissal and discrimination if the tribunal decides it was not a genuine retirement.

The consultation

The government’s original plan, set out in the July 2011 consultation paper, was to make it illegal to issue such notices after 5 April 2011. Furthermore, any notices issued by that date would have to expire before 1 October. Anyone still in employment at 1 October would have the right not to be retired against their will unless one of the usual defences to an age discrimination claim applies – in practice, by showing that the retirement was “objectively justified” – in other words a “proportionate” means of achieving a legitimate aim such as succession planning or meeting health and safety concerns. In practice most employers will probably not be able to rely on this excuse.

A funny thing happened

The government confirmed in January 2011 that this plan would go ahead. However, this week, funning things started to happen. My spies tell me that an email discussion started going round a group of Professional Support Lawyers from the larger London and regional law firms, prompted by some unexpected changes that had appeared on the Acas website, which suggested that retirements would be permitted up to 5 April 2012, not 30 September 2011, as previously advertised. The Acas site, unfortunately, was not only contradictory and unclear, it also kept changing, making the whole process rather baffling. Moreover, why were Acas updating their site for something the government hadn’t announced yet?

It transpired that the reason for this is that the government were concerned the law change might be challenged as having retrospective effect. The logic is this. Many people will already be under notice of compulsory retirement. Since the current law permits such notices to be between 6 and 12 months, some of those notices could expire after 30 September. However, the effect of what the government had proposed would have been that those lawful notices would retrospectively become unlawful. To counteract the risk of that, the government were considering extending the period to 5 April 2012.

Regulations leaked

I say “leaked”, but only because there is still no official source that I can find, and no announcement by the government. But there they are, the Draft Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011.

And this is what they say:

The retirement provisions (schedule 6 of the Age Regs and the relevant bits of the ERA) are being repealed on 6 April. Therefore, anything that happens after 6 April, be it the issuing of a notice or the actual termination of employment, will fall within the usual rules prohibiting age discrimination, UNLESS they fall within the “transitional provisions”.

The transitional provisions that we are interest in are at regulation 5, which says the repeal does not affect a person’s retirement where:

• notification was given before 6 April 2011
• the person “will attain the age limit during the period that begins with that date and ends with 30th September 2011.” The “age limit” means 65 or the workplace Normal Retirement Age, whichever is older.

In such cases the retirement will remain lawful. This means that the notice issued on 5 April 2011 could in theory expire as late as 5 April 2012. (It could also, following a request by the employee, be extended up to 5 October 2012. Anything after that would require a new notice to be issued, which will be unlawful.)

Problem #1

What this means is that, although the last date for retirement is still no longer 30 September, the employee themselves must be 65/NRA by that date. Anyone who would reach 65 on, say, 10 October 2011 cannot be retired under these provisions. This therefore throws up problem number 1. An employer could have given that person notice of retirement on their 64th birthday, to expire 12 months later on 10 October 2011, and that notice is still (as of today’s date, 18 February), lawful and effective. The problem is that from 6 April it will become retrospectively unlawful, and the employer will have to effectively undo all its lawfully-made plans.

Problem #2

Which brings us to problem number 2 (and this is the problem that Darren Newman has also raised in his blog. The transitional provisions only apply to employees who “attain” the age limit during the 6 April-30 September 2011 “window”. This means anyone already over 65/NRA can not be lawfully retired. This is contrary to the way the law works now, because as things stand you don’t have to retire someone at 65/NRA. You can retire them at any time provided on the actual date of retirement they are at least 65/NRA. The idea has always been to encourage a flexible approach to retirement, whereby employers can keep people past 65/NRA if it works for both parties, and then retire them at, say, 67, 70, whenever. The problem now is, if you have an employee aged 64 1/2 in your organisation, you can retire them safely under the transitional provisions. If you have someone aged 70, you can’t. Even if you give then 6 months notice now, their retirement date would fall after 6 April but they would not come under the transitional provisions because they have not “attained” 65 in the relevant window.

It also has a similar “retrospectivity” problem, in that some people over 65/NRA may already be under notice of retirement that the employer, quite reasonably, issued lawfully,  thinking it would remain lawful. However, under the regulations as drafted, someone already aged 65/NRA or more cannot be lawfully retired if the retirement date is after 5 April 2011.

The employer could in theory issue “short” notice and retire then before 6 April, but this would be a technical breach, albeit one which may or may not render the dismissal unfair and discriminatory (there is a risk), but the employer would certainly have to pay 8 weeks’ pay as compensation for the breach.

The only word I can use to describe this situation is “bananas”.

UPDATE (22 Feb): The draft regulations have now been officially published on legislation.gov and they still seem to have the same problem (thanks again, @ljanstis).

UPDATE (2 March): Sanity has been restored (see my comment, below).