The Employment Equality (Age) Regulations were introduced in 2006 to prohibit discrimination in employment based on age. This was largely uncontroversial except for the introduction of a national default retirement age (DRA). Previously, an employer could set its own contractual retirement age.
The DRA currently enables an employer to compulsorily retire an employee at 65 without the risk of an unfair dismissal or age discrimination claim, provided a formal retirement procedure (the Procedure) is followed.
Requiring workers to retire at 65, when they could still make a significant contribution to the workplace and the economy, has been criticised. The Government has reviewed the law relating to retirement, proposing to abolish not only the DRA, but also the Procedure.
Q: What is the Procedure, and why has it been so important?
The Procedure requires that between six and 12 months before the intended date of retirement, staff are notified of the date and of their right to request to continue working.
The request to continue to work beyond the intended retirement date can be for an indefinite or for a fixed period of time. The Procedure involves the nursery holding a meeting to discuss any such request and, where such a request is refused, an appeal.
A benefit of the Procedure is that where it is followed, a dismissal for retirement is not unfair or discriminatory. This avoids the risk of costly tribunal claims. This certainty also allows nurseries to properly plan for succession. It has ensured employees can give a dignified reason for leaving, vacancies can be advertised in good time or requests to continue in employment can be agreed, where it is in the best interests of the nursery and the employee.
In our experience, nurseries have successfully managed the Procedure and have used it as a trigger to conduct an annual audit of staff. Discussing intended retirement dates early with employees, so that succession and recruitment planning can be managed, is a huge benefit in an environment where pastoral care and continuity of service are of utmost importance.
Q: Why has the Government reviewed the DRA and the Procedure?
People today are living longer and enjoying healthier lifestyles. For some this may mean a longer and more active retirement, but others may want to continue working and earning. Nurseries may find extending the careers of those who wish to work beyond pensionable age a good way to retain skills and experience. To date, the decision as to someone's retirement date has ultimately rested with the employer.
It is argued, however, that employers should not be able to compulsorily retire employees.
The High Court made it clear that the DRA of 65 is now not as acceptable as when it was first introduced. A review was commenced by the previous Labour Government and we are now in a period of consultation on its findings.
Q: What are the proposals?
The main proposals in the consultation document are as follows:
- - the DRA will cease to exist completely on 1 October 2011
- - the Procedure will be abolished
- - organisations may seek to operate a compulsory retirement age only if it can be objectively justified. (This is unlikely to be possible in a nursery).
Q: What can you do now?
Nurseries should conduct a staff audit this term. The review should consider the current staffing level to ensure it is appropriate, and should identify any employee who will be 65 this academic year or anyone who is already over 65.
Practically speaking, this academic year is the last opportunity for a nursery to take advantage of the Procedure and DRA. Transitional arrangements will be in place between October 2010 and October 2011. For retirement of any nursery staff intended for 31 August 2011 or before, the employee should be notified of the intended retirement date before 28 February 2011, in accordance with the Procedure.
Of course, nurseries 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 nursery. From April 2011 the Procedure will no longer be available and retirement is unlikely to be a legitimate reason for terminating someone's employment.
Of course, nothing will prevent a member of staff from 'retiring'. The change is the ability of an employer to require retirement.
Q: What are the alternatives to retirement?
There are many desirable policy objectives for the removal of the DRA. But there will be management concerns for nurseries who would have preferred to see an employee retire with dignity at the DRA. From April 2011, unless an employee leaves voluntarily, if a nursery wants an employee to leave, whatever their age, it will only be possible by a dismissal 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 less dignified than retirement and can lead to conflict. Discussions about the future and negotiated settlements to agree departures are therefore likely to increase, impacting on costs.
Q: Is there any guidance on these changes?
The Government is considering a Code of Practice which will aim to guide employers through the likely minefield of discussing people's 'retirement plans', which could in itself be alleged to be discriminatory. The key will be for nurseries to operate effective performance and appraisal systems in conjunction with these discussions. Ill health capability procedures are also likely to be more actively considered.
With all policies it will be more important than ever to ensure that they are non-contractual to afford the nursery maximum flexibility in their use. Any introduction or strengthening of performance management procedures would need to apply to the entire workforce in order to reduce the risk of age discrimination claims.
Q: What should a nursery do today?
With the Procedure and DRA to be abolished, greater focus on rigorous policies and staff management procedures will be essential. We will provide you with a second instalment on the Code of Practice once the consultation has concluded. In the meantime, we suggest the following action be taken:
- - conduct a staff audit
- - consider retiring staff who will be 65 or over this academic year
- - notify staff of intended retirement date of 31 August 2011 by 28 February 2011 at the latest
- - review appraisal, capability, performance and absence management policies to ensure robust and best practice.
If you have any queries please speak with Simon Bevan or another member of the Early Years Team at Veale Wasbrough Vizards: 0117 3145238 or sbevan@vwv.co.uk
