Dear Auntie
I work for an IT company. We have an employee, Peter, who is 59. Under his contract of employment, Peter’s retirement age is stated to be 60. Peter is arguing that his contractual retirement age is 65 as some of our other employees, who were recruited before Peter, have a contractual retirement age of 65. We believe that Peter’s contract is due to terminate automatically once he reaches 60 in August this year.
Peter has asked to extend his retirement age since he cannot afford financially to retire this year. Are we exposed if we dismiss Peter when he reaches 60 and he pursues an unfair dismissal claim?
Anxious about Ages
Dear Anxious about Ages
If you dismiss Peter when he reaches 60, he may try to pursue a claim for unfair dismissal on the basis that you do not have a fair reason and have not followed a fair procedure leading up to his dismissal. But Peter may have problems with persuading a Tribunal to accept he can bring a claim at all. You have to be “below the normal retiring age for an employee holding the position held by the employee” whether a man or a woman – on the date of dismissal – in order to bring a claim. If there isn’t a normal retiring age, an employee can only bring an unfair dismissal claim if he is younger than 65 at retirement.
In the leading case on normal retiring ages, the Court held that the contractual retirement age did not fix the “normal retiring age” for the purposes of unfair dismissal. However, where the contractual retirement age applies to nearly all of the employees holding the position held by Peter then the Court will assume – unless anyone proves otherwise – that the contractual retirement age is the normal retirement age for the group. So, in practical terms, you would need to look at all the other employees doing Peter’s job to see if 60 or 65 was the normal retirement age for that position. How should you approach that?
The Court held that “normal” does not mean that an employer should adopt a purely statistical approach by ascertaining the age at which the majority of employees actually retire. Employers can have regard to whether some of them may have been retained in office until a higher age for special reasons, such as a temporary shortage of employees with a particular skill, or a temporary glut of work, or personal consideration for an employee who has not sufficient service to qualify for a full pension. You would need to consider if any of these reasons are relevant to you.
The proper test to ascertain the normal retirement age is “what would be the reasonable expectation or understanding of employees holding the position of Peter at the relevant time?” The contractual retiring age will usually be the normal retiring age, but it may be displaced by evidence that it is departed from regularly in practice. So, if you regularly let people stay beyond their contractual retirement age, you can’t argue that’s your normal retiring age. The evidence may show that the contractual retirement age has been superseded by some definite higher age and, if so, that will become the normal retirement age. Or the evidence may show that the contractual retirement age has been abandoned and that employees retire at a variety of higher ages. In that case, there will be no normal retiring age and the statutory alternative of 65 will apply.
If you can establish that the normal retirement age is 60, that there is no practice whereby employees stay on after 60 and that you have discretion to continue employment after that age, but there is no right to be retained, then the minimum retirement age and the contractual retirement age will be 60 and the Tribunal will not have jurisdiction to hear any potential unfair dismissal claim brought by Peter.
Finally, if Peter holds a “unique” position, which does not compare with anyone else’s, then he alone could have his own “normal retirement age” for the purposes of meeting the age requirements for bringing an unfair dismissal claim. And bear in mind that if you are “forcibly” retiring employees who don’t want to go, you need to follow the new statutory procedures and hold a meeting with a companion before you “let them go”.
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