Retirement Planning (September 2011)

Most employers will be aware of the recent changes to the retirement regime.  Since the start of April 2011, it has not been possible to issue notices to compulsorily retire employees, although where notice was issued before April, it will still be legitimate for these to take effect.  Has your organisation reviewed its practice with regard to retirement?  What about performance management of a potentially aging workforce? And have you reviewed your recruitment procedures to ensure that job opportunities are available to all?  There are important issues for every employer to consider and address. Failure to consider these issues carefully can be costly given the claims that can arise.

Employees can no longer be forced to retire at any particular age, unless the employer can objectively justify having that retirement age.  The great unknown is how the courts will approach the issue of justifying a mandatory retirement age for employees.  Will it be only in very unusual circumstances that an employer can justify forced retirement, or will it be relatively easy to do?  What sort of issues will be relevant to the question of justification?  ACAS suggests that the test will not be an easy one to satisfy, but a number of European cases have suggested that the hurdle may be far from insurmountable.

Relevant justifications could potentially include:

• Encouraging young people to seek employment by holding out good promotion prospects
• “Sharing employment between the generations”
• Facilitating the employer’s succession planning
• Providing stability and certainty in the workplace
• Creating a “happy workforce” allowing individuals to retire with dignity, rather than being forced out due to poor performance.