How do you retire an employee? The correct way to handle retirement

Peninsula Team

October 29 2013

Since the repeal of the statutory retirement procedure, enforced retirement is no longer a lawful dismissal route unless the retirement age is capable of being objectively justified. Objective justification is an extremely difficult test to pass and the vast majority of employers will not be able to meet the requirements. Case law has indicated what is required if a retirement age is to be objectively justified, as follows: Legitimate Aim The employer must have an aim. The aim must be the actual aim, although it does not matter if the aim was not articulated or even realised at the time the measure was adopted. The aim must be legitimate in the particular circumstances of the case. For example, improving the recruitment of younger people is in principle a legitimate aim. But if there is in fact no problem in recruiting young people and the problem lies in retaining the older and more experienced workers then it may not be a legitimate aim for the business concerned. Avoiding the need for performance management may be a legitimate aim, but if in fact the business already has sophisticated performance management procedures in place, it may not be a legitimate aim to avoid them for only one section of the workforce. Aims must be legitimate with reference to public interest. Aims relating only to the individual aims of the business e.g. cost reduction and improving competitiveness, are generally not legitimate. Proportionality The means chosen (i.e. the compulsory retirement age) must be an appropriate and necessary way of achieving the aim. It is one thing to say that the aim is to achieve a balanced and diverse workforce. It is another thing to say that a compulsory retirement age of 65 is proportionate means of achieving that aim because there may have been another non-discriminatory measure which would have achieved the same aim. Were a retirement age objectively justifiable, the employer would simply be able to give contractual notice to the employee of his retirement dismissal. Clearly, many employees take the decision themselves to retire, with no intervention from the employer. This can obviously be at any age, with some employees deciding to take early retirement and some choosing to stay on. Employees must give contractual notice of their retirement to their employer, in the same way as if they were simply leaving to go to another job. If you need any further information regarding retirement, please give us a call on 0844 892 2772.

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