Thu 13 Dec 2012

What can employers ask employees about their retirement plans?

Following the abolition of the default retirement age on 6 April 2011, any dismissal based on an employee's age now amounts to direct age discrimination by the employer.

Employers do have the opportunity to objectively justify such age-based dismissals provided that any such retirement is a proportionate means of achieving a legitimate aim. However, what amounts to an "objective justification" is still a developing concept, ranging from succession planning to providing promotion opportunities for younger workers to maintaining dignity for older workers by limiting the need for performance-based dismissals.

Practically speaking, employers do still require to carry out succession planning, which is likely to necessitate conversations with older employees about their retirement plans. However, employers must be careful to avoid any suggestion of age discrimination when raising the possibility of retirement.

After the abolition of the default retirement age, ACAS published guidance on Age and the Workplace which acts as a guide for dealing with retirement without the default retirement age. The ACAS advice is to hold conversations with all employees, old or young, about their performance and future plans, keeping written records of all such conversations.

However, concerns had grown, following the abolition of the default retirement age, that simply holding so-called "retirement conversations" with older workers could amount to age discrimination. Happily for employers, the Employment Tribunal has recently addressed this concern in the case of Quick v Cornwall Council and another and found that age-related comments made during the course of employment did not amount to age discrimination.

Mrs Quick was a headmistress at a primary school in Cornwall. The Council intended to restructure primary schooling in the area by forming a partnership between four nearby primary schools which would inevitably lead to the retirement or redeployment of staff. Unrelated to these proposals or her work in general, Mrs Quick suffered a number of episodes of depressive illness between 2007 and 2011 which culminated in her dismissal in July 2011 on the grounds of serious misconduct and an irretrievable breakdown in trust between the parties.

Mrs Quick raised a claim for unfair dismissal and age discrimination. Her age discrimination claim focussed on a number of comments made about Mrs Quick's retirement plans, such as:

  • a colleague asking Mrs Quick if she had any plans for retiring;
  • a discussion between Mrs Quick and the chair of governors in which Mrs Quick's retirement was discussed;
  • comments in an email chain considering how much notice Mrs Quick would require to give if she intended to retire; and
  • a comment from the Council's Senior Education Improvement Officer that "too many people carry on after they should have retired".

The Tribunal found that the dismissal was fair in this instance and, importantly, none of Mrs Quick's allegations amounted to age discrimination. The Tribunal placed emphasis on the Council's plans to restructure the schooling in Mrs Quick's area and noted that it was sensible for the Council to discuss and record information such as possible retirement of current head teachers in the succession planning process. The Tribunal also noted that, in the context of a schools restructure here, the mere fact of a discussion about retirement was "not per se any less favourable treatment because it cannot be imposed".

When the default retirement age was abolished, many employers feared that the concept of "retirement" would likewise disappear and "retirement" itself would become a taboo word in the workplace. This case provides useful reassurance for employers that it may be possible to hold "retirement conversations" with older employees without falling foul of the age discrimination legislation. The Tribunal appears to have accepted that employers should be able to discuss the possibility of retirement in the context of workforce planning and, arguably, that employees should not assume that their employer raising retirement as a topic of discussion is an act of unlawful age discrimination.

Although the judgment in Quick does not refer to the ACAS guidance, the decision reinforces the ACAS suggestion of instilling a culture of workplace discussions. These discussions can be simple, confidential and informal and can cover topics such as performance to date, employer expectations and future aspirations of the employee. It is recommended that such discussions be held at least annually with all employees thereby providing employers with a platform on which to raise the possibility of retirement with older employees. Crucially, workplace discussions should raise open questions and facilitate conversations between employers and employees. The ACAS guidance contains helpful examples of how conversations can assist employers to understand employees' future aims and ensure that businesses benefit from each employee's skills and goals.

The important points to remember are that:

  • businesses can and should carry out succession planning;
  • but, at the same time, employers must be careful not to assume that an employee will be retiring simply because they have reached a certain age.

For more information on dealing with retirement without the default retirement age, you can access the full ACAS guidance here.

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