Compulsory Retirement – not a meaningless matter for the closed mind

Martin WIlliams of Brighton Solicitors, Mayo Wynne Baxter, looks at the issues surrounding compulsory retirement.

From 1 October 2011 retirement will only be a fair reason for dismissal if the age at which it occurs can be objectively justified.  However, some employees are still going through the present system of retirement prior to that date.  A new case has arisen which reminds employers that although they may have actioned compulsory retirements prior to the change coming into full force this may not be without its problems.

The Employment Appeals Tribunal (EAT) has recently held in Compass Group plc v Ayodele that the “duty to consider” procedure in Section 6 of the Employment Equality (Age) Regulations 2006, requires the employer to consider an employee’s request to work beyond a default retirement age in good faith.

Mr Ayodele was notified by his employer that it was their intention to dismiss him on his 65th birthday. He made a request not to retire on that date, however his employer had a policy that all staff were retired at the age of 65 with no exceptions. The initial meeting held with Mr Ayodele confirmed this, as did the subsequent appeal meeting. Following his retirement, Mr Ayodele submitted a claim for unfair dismissal.

At the hearing, Compass Group gave evidence that both meetings had been “meaningless formalities”. The matter of Mr Ayodele’s retirement had been a “done deal” because “the policy was the policy” and there was no leeway to be granted when applying it.

The Employment Tribunal found that Mr Ayodele had been dismissed unfairly. It held that a sham process such as that displayed by the Compass Group neither followed the legislation, nor complied with the spirit in which that legislation was intended. The Tribunal held that it was implicit that any statutory obligation must be carried out in good faith, and awarded Mr Ayodele two years’ loss of earnings. This decision was later upheld by the EAT, who stated that an employer could not “simply sit through the [request to extend] meeting with a closed mind”. This was not a way in which to effectively comply with the legislative provisions and there is no point in holding a meeting simply for formalities sake.

While this case is important, it does not entirely open the floodgates for claims following retirement dismissals. The good faith obligation only obliges the employer to “genuinely consider” a request, it does not mean that the reasoning behind a decision can be later challenged. If however a claimant can prove that their employer had no intention of even considering their request to work beyond retirement, this could well fall under the umbrella for claim potential.  In the future a lack of genuine consideration of a request to stay on could also undermine the decision to retire an employee, even if the age for retirement set by the employer could be objectively justified.

With employers rushing to retire employees before the October deadline, it may be that some make this mistake, the fear of an ageing workforce being the only thing on their mind. The deadline for the Claimant to lodge an ET1 with the Employment Tribunal is 3 months from the date of termination. It will remain to be seen how many cases are submitted and what lasting impact this ruling may have.

For more information on business employment law visit www.mayowynnebaxter.co.uk