Prior to 6 April 2011, employers in the UK could rely on the retirement of the employee as being a potentially fair reason for dismissal. This is no longer the case. Now, giving an employee notice of compulsory retirement at a specific age exposes employers to claims of unfair dismissal and unlawful age discrimination. Similarly, any reference to a compulsory retirement age in a contract of employment or staff handbook must now be removed unless it can be objectively justified. With the concept of a default retirement age also being phased out this year, employers in the UK must be starting to think that they will never be able to ‘retire’ an employee.
Age discrimination legislation has not been introduced in Guernsey so there is no similar requirement to remove reference to a compulsory retirement age from Guernsey employment contracts. That said, an employer must still act fairly in any dismissal situation and a specific retirement age must be clearly set out in the employment documentation.
In a recent case before the Guernsey Employment Tribunal1, an employee sought to argue that he had been unfairly dismissed through forced retirement when he attained the age of 65.
Mr Cluer was employed by CAMS Limited as a Sales and Hire Operative from January 2002 until October 2010. He reached the age of 65 on 6 October 2010. His contract of employment did not, however, make any reference to a compulsory retirement age for employees and neither did any company policy.
Mr Littlewood, representing CAMS Limited, described how Mr Cluer’s conduct over the previous two years had been far from satisfactory, with instances of abusive behaviour towards staff and customers, concerns regarding health and safety, noncompliance with management instructions and unauthorised expenditure. Mr Littlewood explained that, as a result of a further incident relating to Mr Cluer’s conduct on 25 October 2010, he felt he had to ask him to retire.
Mr Littlewood gave Mr Cluer a letter asking him to take the day off to consider his retirement plans and return at 4pm to attend a meeting to discuss them. He did so, and, despite Mr Cluer’s requests to work up until Christmas and then retire, he received a further letter from Mr Littlewood the following day, confirming that he was to retire at the end of the month.
In respect of enforcing a retirement age, Mr Littlewood relied upon his knowledge of public sector employees who, he understood, were required to retire upon reaching their 65th birthday.
Mr Cluer disagreed and believed his dismissal by enforced retirement was unlawful as there was no reference to a compulsory retirement age in his contract of employment.
Having considered all the evidence, the Tribunal found in favour of Mr Cluer. However, the panel members concluded that Mr Cluer had been dismissed on conduct grounds, not because of his age. The relevance of Mr Cluer’s age in this case lay in the fact that he had reached retirement age and Mr Littlewood relied upon this as an excuse to act. Specifically, the Tribunal found that “Mr Cluer’s age, having reached age 65, presented an opportunity to Mr Littlewood for the matter of their poor working relations and Mr Littlewood’s failure to deal with the issue of Mr Cluer’s conduct in the workplace to be dealt with under the guise of retirement”. As conduct was the reason for the dismissal and no disciplinary procedure had been followed, the Tribunal found that Mr Cluer had been unfairly dismissed.
It is perfectly lawful to refer to a compulsory retirement age, for example age 65, in a Guernsey contract of employment. Provided the contract of employment makes it clear that termination at age 65 is by mutual consent and there is no requirement for notice or pay in lieu of notice, there should be no legal exposure for the employer if the employment is terminated on an employee’s 65th birthday for no other reason than by reason of them attaining the age of 65.
Had Mr Cluer’s contract of employment contained a compulsory retirement age and had his employment been terminated by mutual agreement on him attaining that age, the case would have undoubtedly centred around different facts and had a different outcome, if indeed it had been brought before the Tribunal at all.
Even if it is not expressly referred to in the contract of employment, it may be that a policy can be inferred by a reference in some other document, for example, if there is a reference to a retirement age in any pension scheme booklet relevant to the employment.
That said, any express reference is capable of being rebutted by a ‘custom and practice’ argument if, for example, in practice, employees are typically retired at some other age. If it can be established that there is a legitimate expectation and understanding amongst employees that that is the case, this may be sufficient to define a ‘normal retirement age’ which may differ from the ‘contractual retirement age’.