Retiring attitudes

Currently, the decision about someone's retirement date ultimately rests with the employer. However, following a Government review into the national default retirement age, this is all set to change. Naseem Nabi reports

In 2006, the Employment Equality (Age) Regulations ("the Regulations") were introduced to prohibit discrimination in employment based on age. This was uncontroversial except for the introduction of a default retirement age (DRA); previously an employer could set its own retirement age.

The DRA is currently 65, and compulsory retirement below that age is prohibited unless it can be objectively justified. Effectively, the Regulations permit an employer to discriminate against an employee on the grounds of their age by permitting compulsory retirement. In legal terms, this will not be "unfair" or discriminatory if the formal retirement procedure ("the Procedure") is followed. Requiring older workers to retire at 65, where they may still be able to make a significant contribution to the workplace and the economy has been heavily criticised.

The Procedure requires that between 6 and 12 months before the intended date of retirement, a school must notify the relevant employee of their retirement date, and inform them of their right to request to continue working. As most members of the school's workforce are likely to retire at the end of the academic year, notification of intended retirement usually takes place in the Autumn term.

If the Procedure is followed correctly, a dismissal for retirement will not be unfair or discriminatory, Thereby avoiding the risk of legal costs and management time being wasted on tribunal claims. The certainty of the Procedure and the decision-making process allows schools to properly manage retirements. It has ensured employees can give a dignified reason for leaving, vacancies can be advertised in good time and requests to continue in employment can be agreed where it is in the best interests of the school and employee.

Changes to the law
The DRA has always been the subject of challenge. It has been argued there should be no DRA and employers should not be able to compulsorily retire employees. While the DRA stood up to a ruling at the European Court of Justice in early 2009, the High Court in late 2009 made it clear that the DRA was now not as acceptable as when it was first introduced. As a result the previous Labour Government commenced a review into the viability of the DRA, the consultation for which has now closed.

It has been decided that:
• the DRA will cease to exist completely on 1 October 2011 (transitional arrangements to apply from April 2011); and
• the Procedure will be abolished.
Organisations may seek to operate a compulsory retirement age provided that this can be objectively justified. This is unlikely to be possible for the vast majority of school employers.

Transitional arrangements
Whenever there is a proposed change in the law, there are administrative and practical benefits in ensuring there is a transition before the changes take effect. The abolition of the DRA and the Procedure are no exception, giving schools an opportunity to plan ahead for the new regime.

The transitional period allows for retirement of employees at 65 or over under the Procedure to continue through to completion if:
1. the notification of retirement is issued by the school prior to April 2011;
2. the date of retirement falls before 1 October 2011; and
3. all the requirements of the Procedures are met.

What can you do now?
All schools should conduct a staff audit as soon as possible. This is a practice we strongly recommend and should be part of the HR management and culture of any school. The review should always consider the current staffing level to ensure it is appropriate but will also identify any employee who will be 65 this academic year or who is already over 65.

This academic year is a school's last opportunity to take advantage of the Procedure and DRA. For retirements intended for 31 August 2011, the employee should be notified of the intended retirement date before 28 February 2011 in accordance with the Procedure. The school will then be protected from age discrimination claims.

Of course you may continue to employ anyone over the age of 65 beyond this date and we encourage you to do so if it is in the best interests of the school. In April 2011, the Procedure will no longer be available and retirement will not be a legitimate reason for terminating someone's employment unless it is objectively justified. However, nothing will prevent a member of staff from "retiring"; the change is the ability of an employer to require retirement.

The future
There will be new management concerns for schools that would have preferred to see an employee retire with dignity at the DRA. Unless an employee leaves voluntarily, if a school wants an employee to leave, whatever their age, dismissal will only be possible for a potentially fair reason: conduct, capability, illegality or some other substantial reason, having followed a fair procedure. Dismissal of an employee in these circumstances is far less dignified than retirement and can lead to conflict at a time when one would rather celebrate the contribution a colleague has made. Discussions about the future and negotiated settlements to agree departures are therefore likely to increase, which will inevitably impact on a school's budget.

Code of practice
In the light of employer concerns, the Government is considering a Code of Practice which will seek to guide employers through the likely minefield of discussing people's retirement plans, which could itself be alleged to be discriminatory. The key will be for schools to operate highly effective performance and appraisal systems in conjunction with these discussions. While raising performance concerns may be challenging, if someone's performance deteriorates over the years, schools will no longer be able to use an employee's forthcoming retirement as a means of achieving their departure. This may lead to more time consuming management of employees. Ill health capability procedures may also become more relevant.

Schools should ensure that all policies are non-contractual to afford maximum flexibility in their use. Any introduction or strengthening of performance management procedures would need to apply to the workforce in its entirety, irrespective of age, in order to reduce the risk of an age discrimination claim.

Conclusion
Following the abolition of the DRA, schools will need to consider their staff management procedures, in terms of performance, capability and ill-health, more carefully. Greater focus on rigorous policies and procedures on staff management will be essential.

Action points:
• conduct a staff audit;
• consider using the procedure for any members of staff who will be 65 or who are already over 65 this academic year;
• notify staff of intended retirement date of 31 August 2011 by 28 February 2011 at the latest; and
• review appraisal, capability, performance and absence management policies to ensure robust and best practice.

Naseem Nabi is an associate at Veale Wasbrough Vizards. Naseem can be contacted on 0117 314 5630 or at nnabi@vwv.co.uk.

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