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).

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About Mrs Markleham

Employment lawyer, discrimination lawyer, mildly peevish old woman.
This entry was posted in Age discrimination, Discrimination, Retirement. Bookmark the permalink.

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

  1. Pingback: Abolition of Default Retirement Age – important update « in-Company Training

  2. I agree with you as to the problems with the drafting which you have identified. I think the real problem is that the reference to “that date” in r.5(1)(b) was intended to have been a reference to the date on which the notice of retirement is served, not a reference to the commencement date of the Regulations – this would make a lot more sense, and avoids some of the daft outcomes which the Regulations, as currently drafted, seem to cause.

    To explain my point, it is easiest to use some illustrations. Let us take 5 hypothetical individuals:

    A – who is currently 64, and will turn 65 in June 2011.
    B – who is currently 64, and will turn 65 in November 2011.
    C – who is currently 64, and will turn 65 on 1 April 2011.
    D – who is already 65, but has not already been issued with a notice of retirement.
    E – who is already 65, but who has been issued with a notice of retirement.

    If we apply the draft Regulations as they CURRENTLY stand, the results are as follows:

    – The transitional arrangements clearly apply to person A.
    – The transitional arrangements clearly do not apply to person B – it will never be possible to “compulsorily” retire this person.
    – The transitional arrangements clearly do not apply to person C, as he/she will not be able to satisfy r.5(1)(b) as currently drafted.
    – The transitional arrangements clearly do not apply to person D, as he/she will not be able to satisfy r.5(1)(b) as currently drafted.
    – The transitional arrangements clearly do not apply to person E, as he/she will not be able to satisfy r.5(1)(b) as currently drafted.

    If we then consider the same people, but apply the draft Regulations with my proposed amendment to r.5(1)(b), this is the outcome:

    – The transitional arrangements clearly apply to person A.
    – The transitional arrangements clearly do not apply to person B – it will never be possible to “compulsorily” retire this person.
    – The transitional arrangements COULD apply to person C, provided that the notice of retirement is served on him/her prior to 1 April 2011 (to reiterate, this is because I believe that the reference to “that date” in r.5(1)(b) is intended to be a reference to the date on which the notice of retirement is served, not a reference to the commencement date of the Regulations). So, provided that the notice is served before the person turns 65, and provided they will turn 65 before 30 September 2011, the transitional arrangements will apply.
    – The transitional arrangements CANNOT apply to person D, because it is not possible to issue a notice of retirement before he/she turns 65 (so r.5(1)(b) in its suggested revised form is not satisfied).

    Person E is where problems still lie. If the notice of retirement was issued before the person turned 65, then the transitional arrangements will apply. But if the notice of retirement was only issued after the person turned 65, then the transitional arrangements cannot apply. The consquence of this is to render the notice of retirement effectively null and void, which I regard as grossly unfair where that notice has been properly served, and the employer (and employee) have been planning on that basis. For example, what if person E had turned 65 on 1 January 2010, but his/her employer had agreed to his/her earlier request to work beyond retirement by offering a 2 year fixed term extension? In order to comply with the current legislation, that employer would be wishing to serve a fresh notice of retirement (with an effective date of 31 December 2011), and could have done so on say 30 January 2011. In my view, that employer should still be allowed to force person E to retire on 31 December 2011, in accordance with a notice which has already been validly served. But the draft Regulations, as currently worded, do not permit that.

    • Thanks Jon, interesting comment, but as you point out, whether “that date” is the date the Regs come in or the date the retirement notice is served, it still has the completely unjustified and unfair result that employers cannot retire anyone who reached their 65th birthday before the notice is served – a result that would render unlawful notices that have already been lawfully issued.

  3. Emma Blake says:

    Brilliant blog post. This is the first account of the problem which I’ve actually understood. Congratulations on writing so clearly.

  4. marktarran says:

    There seems to be some confusion over whether this is what the Government really intends. PEN (the PSL Employment Network) has been discussing this all week, and two separate conversations with BIS have resulted in two different answers. Person #1 at BIS seemed to believe the transitional provisions are only intended to apply to those whose 65th birthday falls between 6 April and 30 Sept. However, a second conversation with Person #2 has revealed it was NOT their intention to exclude those who will have attained age 65 before April 2011 from the transitional provisions. I have the names of the two BIS contacts if anyone wants them to follow up, but I won’t publish them here.

    According to Person #2, BIS are apparently in the process of reviewing the draft regs to see if they require amendment or otherwise whether amendment would be a good idea “for the sake of clarity”. However, his view was that the error in drafting might possibly be saved by the Interpretation Act because there’s a presumption against retrospectivity in there. I wouldn’t want to rely on that one, myself.

    The Regs have supposedly been laid (on 16 Feb). If new regs are going to be laid in time for 6 April the government will have to get on with it. I still don’t understand why there’s been no official announcement about it.

  5. Pingback: UK Government is confusing UK employers : Think Germinate

  6. Pingback: Confusion Remains over Abolition of Retirement Age

  7. Mark Tarran says:

    Further news: BIS has now confirmed over the telephone (I am told by Eversheds) that amended regulations will be laid, at some point not before next week, but they are “tight-lipped” over what the content will be.

  8. Sanity has been restored. New draft regulations have been published (although again, not on any government website as yet). Daniel Barnett and Darren Newman have summarised them so I won’t bother. But the new regs seem to do the job that should have been done before.

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