Compulsory Retirement - Checklist of Issues for Employers

Considerations and options in light of the Heyday challenge, the European Court of Justice case of Palacios de la Villa –v- Cortefiel Servicios SA and the Employment Appeal Tribunal ruling in Johns –v- Solent SD Limited.

General considerations include the following:

  • Heyday and other employee groups have for some time been advising employees compulsorily retired at 65 or above to lodge claims with the Employment Tribunal.
  • It may be possible to defeat some new claims on the basis that they are out of time. Employers should be able to argue that such claims be struck out at Pre-Hearing Review.
  • Claims already brought in respect of which a stay has been refused and which may have already been struck out are likely to be re-visited and stayed. 
  • Claims in relation to both public and private sector employees will be stayed.
  • Only compulsory retirement claims will be stayed under the Practice Direction. Other age discrimination and other Employment Tribunal claims will not automatically be stayed.
  • Where appropriate, employers should notify their insurers and/or make financial provision in their accounts for retirement related claims.

The options for employers include the following:

  • To ensure wherever possible that retirement is by agreement, and to clearly document this fact.
  • To agree to employees working beyond age 65 - possibly making this subject to conditions.
  • To not apply a mandatory retirement age to avoid the risk of future liability. It is possible that the Government may scrap the mandatory retirement age in 2011.
  • To terminate for reasons other than retirement following the statutory dismissal and disciplinary procedures.
  • To continue compulsorily to retire employees following the procedures in the Age Regulations in the hope that either the Heyday case fails to establish that either the Directive applies to statutory retirement ages or that retirement dismissals are not objectively justified.
  • To continue compulsorily to retire employees following the procedures in the Age Regulations ensuring that the procedures encompass the statutory dismissal and disciplinary procedures, and that arguments of objective justification are built in to the process.

The appropriate options will depend on the position of the organisation taking into account the impact in terms of cost and wider employee relations.