I really don’t like the phrase ‘default retirement age’. It sounds as though it covers something that happens automatically without any need for an employer to actually make a decision or do anything proactive. And did you know that the legislation simply doesn’t use that phrase at all? In legal terms there is simply no such thing as a default retirement age. What we have instead is an exception in Schedule 9, Para 8 of the Equality Act which says that it is not discrimination to dismiss someone over the age of 65 if the reason for dismissal is retirement. This is backed up by some fiendishly complicated provisions in the Employment Rights Act describing the procedure that an employer must follow in order to dismiss someone for retirement – including giving them the right to ask for their job to be extended.
This isn’t a default retirement age – it’s a right to sack 65 year olds. The employer does not have to show that the decision is a fair one or that there is any business justification at all. As long as the procedure is followed the dismissal can’t be challenged on grounds of fairness or age discrimination.
I can understand why employers value the right to sack 65 year olds and why some would not want to see it abolished. But I struggle to see any justification for the demand made by the CBI today for businesses to be given an extra year to prepare. Prepare for what? There is no void created by the removal of the right to sack 65 year olds, just the extension of well established principles to the whole workforce regardless of age.
I’d also take issue with two other specific concerns raised by the CBI. The first is that the Government must legislate to protect conversations about retirement with employees because otherwise asking an employee what his or her plans are could amount to discrimination.
I don’t think so.
There is nothing wrong with an employer discussing an employee’s plans – provided it is not part of a campaign to force the employee out. In many employers where employees qualify for a pension before 65, these conversations go on already and they have never caused a problem. Indeed accompanied by help with financial planning they can be very positive and helpful. There should be no basis for a discrimination claim if the employer simply asks a 64 year old whether they plan to retire or not, unless the employer fails to hide its disappointment when the employee says no. Legislation to that effect is simply unnecessary.
My second issue is more general. In its press release, the CBI says:
For an employer, performance-related dismissals are already the hardest kind of dismissal to get right. Many dismissals take over a year and cause undue stress and cost to both parties. This is not a good way to end an employment relationship
I don’t dispute that many employers fail to get performance related dismissals right – but that is not the fault of employment law, it is the fault of bad performance management. If dismissals take more than a year that is absolutely not the result of some legal requirement. All employment law requires is that employees are communicated with effectively, given a reasonable opportunity to improve and a clear warning that in the absence of such improvement they face dismissal. Sprinkle in a general level of consistent treatment and you have the recipe for a fair dismissal. It goes wrong because managers fail to give effective feedback, don’t act consistently and only start ‘performance management’ when they are already at their wits’ end with the problem employee in question. It is certainly true that many employers have dealt with poor performance by waiting patiently until the employee is 65 and then ‘retiring’ them – but I don’t think it’s right for that to continue to be an option for another year.
The CBI also suggests that the Government should
Use the employment law review to streamline and rebalance the law on performance management and unfair dismissal. Introduce simpler performance and capability procedures for employers and develop better guidance for line managers to deal with declining performance among older workers. The Government should also make compromise agreements more straightforward to use.
But all the law currently requires is for employers to behave ‘reasonably’. How could the legislation possibly be simpler than that? Is the CBI suggesting that there should be something specific in unfair dismissal law requiring a procedure to be followed in capability cases? That would just make the law more complicated and give us employment lawyers more to argue about. This is just the sort of reasoning that led to the statutory dispute resolution procedures and you’ll remember what chaos ensued from that bright idea.
One thing I do agree with the CBI on though, is that the removal of the right to sack 65 year olds will lead to increased tribunal claims. That is inevitable. If you give the right not to be unfairly dismissed to people who did not previously have it then some of them will sue when they get dismissed. It is worth noting that this pretty obvious fact was completely missing from the Government’s Regulatory Impact Assessment when the consultation on sacking 65 year olds was published (check out pages 44/45). As a result the abolition of the exception was actually presented as a deregulatory measure which is simply absurd.
The Government should press ahead with the abolition of the right to sack 65 year olds and accept that this does place an additional burden on business. Under their own rules this requires them to repeal an item of regulation to the redress the balance – any suggestions?
