Following on from last month's urgent update on the scrapping of the Default Retirement Age ("DRA"), the Department for Business Innovation and Skills has now issued amended Regulations dealing with the position whilst the law changes (known as 'transitional provisions' in legal circles don't you know). Fingers crossed that this marks the end of this particular saga (a 'Saga holiday' if you will … groan), but even though you may be suffering from 'retirement fatigue' you should read on to discover the interesting twists (genuinely!) that this tale has now taken …
The key amendment is in Regulation 5(1)(b) which now reads: "(b) that person has attained the age limit or will attain it before 1 October 2011".
Accordingly, you can serve notice to lawfully retire an employee provided that the notice is served by 5 April 2011 and the employee has attained or will attain the DRA (or the business' Normal Retirement Age if it is over 65 years) on or before 30 September 2011. The trigger for a splurge of legal articles on the previous draft was that it suggested that employees who had reached 65 by 5 April 2011 from being retired under these provisions.
The Regulations contain additional (and complex) transitional provisions, summarised as follows:
- Employees served with notice retain the right to request to stay on beyond retirement age provided such request is made no later than three months before their retirement date. The latest date for an employee to give such notice will be 4 January 2012, on the basis that twelve months' notice to retire was served 5 April 2011. All requirements of the statutory retirement procedure must have been met.
- You retain the right to refuse an extension, or to agree to a fixed or indefinite period during which the employee can work beyond the retirement age.
- If an extension has been agreed for more than six months, a fresh notice to retire will need to be served and it will only be lawful to serve such notice up until 5 April 2011.
- If you give the employee twelve months' notice on 5 April 2011, expiring 5 April 2012, and subsequently agree an extension for no more than six months, this will give the employee a retirement date of 5 October 2012. This therefore appears to be the latest date that an employee can be retired under the current law governing retirement.
- The Regulations permit notice to be served between 1st and 5th April 2011, but serving notice during this period does not allow for the minimum period of 6 months notice to run prior to the retirement date, namely 30 September 2011. Accordingly, you will be liable for the penalty of up to eight weeks' pay for short notice.
The transitional provisions are still a minefield and we will update you on any further issues that arise. You should also note that you can still try and 'retire' someone after on or after 6 April 2011 by relying on a term in the contract of employment which states what the retirement age of the business is. However, you will need to objectively justify such a dismissal as a proportionate means of achieving a legitimate aim, i.e. that a retirement age is an appropriate and necessary way of addressing the issue. Don't worry if the thought of doing this sends a shiver down your spine - this is normal as such justification is likely to be difficult and, by its nature (i.e. because a retirement dismissal is an age-related act), invite claims from disgruntled employees. Therefore, it's nearly decision time: Will you be retaining a default retirement age or following the lead of B&Q, Sainsbury's, Marks and Spencer, BT, etc. and abolishing it?