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Retirement Process Update - Extent to which statutory procedures can still be used

14 January 2011 #Employment


Background

 

Most retirement policies reflect the current statutory retirement procedures which set out a national default retirement age of 65.  Where this statutory procedure has been followed to the letter, employers have been able to retire employees without risk of unfair dismissal or age discrimination claims.

 

Proposed changes

 

Despite rumours that the proposals may be put back at least a year, the Government has now confirmed its proposals to phase out the default retirement age of 65 and all associated statutory retirement procedures from 1 October 2011. 

 

ACAS, BIS, Directgov and Age Positive have now provided guidance on this but how it will actually apply in practice will still be difficult and employers must give this serious consideration now.

 

In practice what does this mean now?


  • You can only retire employees under the statutory retirement procedure if their retirement date falls before 1 October 2011; and
  • You must ensure that the notification of retirement is deemed served on the employee by 31 March 2011 and therefore, you must make sure the notice is given to the employee personally on 30 March 2011 or earlier if by post. This takes into account the complicated rules regarding effective notice. Notice given on 31 March will not begin to run until the next day, and so will extend beyond 30 September.

Watch out for confusion over the dates! 

 

Note:  Employers can still issue a new notification of retirement between 31 March and before 6 April 2011, but if they do so they must use the short notice provisions, under which an employee could claim compensation (subject to a maximum of eight weeks` wages) and the subsequent retirement may be open to challenge.  Therefore, we would not advise this route if it is avoidable. 

 

What should employers do now?

 

Managers should already have reliable processes in place to monitor the retirement age of all employees within their teams.  It is advisable to have alerts for impending retirements at least a year in advance.

 

Remember, you do not have to retire employees at 65 if you wish to continue utilising their skills.

 

In the meantime employers should be undertaking a detailed review of retirement procedures in order to determine how to approach retirements going forward.  Clarkslegal can assist with this process where required.

 

Don`t forget about extensions

 

Less than 6 months

If an employee requests an extension to work beyond a retirement date which is less than 6 months and the extension would end on or before 30 September 2011, there is no requirement to issue a new notification of retirement and therefore, employers can continue to follow statutory retirement procedure.

 

6 months or more and extended retirement date will fall on or before 30 September 2011

If an employee requests an extension to work beyond the retirement date which is 6 months or more and:

·          The extension is granted; and

·          The new notification of retirement is issued by 30 March 2011 and gives a minimum of 6 months notice (i.e. 5 months and 28 days not enough); and

·          The extended retirement date will fall on or before 30 September 2011;

Employers can follow the statutory retirement procedure.

 

6 months or more and extended retirement date will fall after 30 September 2011

If an employee requests an extension to work beyond the retirement date which is 6 months or more and:

·          The extension is granted; but

·          The new notification of retirement cannot be issued by 30 March 2011; and/or

·          The extended retirement date will fall after 30 September 2011;

Employers cannot rely on the statutory retirement procedure and will need to objectively justify the retirement and/or follow a fair procedure under ordinary unfair dismissal rules and rely on one of the potentially fair reasons for dismissal.

 

If in doubt seek advice from HR or give us a call!

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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