Retirement age can no longer be stipulated by employers
The Discrimination (Jersey) Law 2013 (The “Law”) has been updated with age discrimination being added as a protected characteristic. A number of changes are included within the update, however this article primarily focuses on the issue of retirement which is likely to be of key interest to employers and employees alike.
It should first be noted that although the amendment takes effect from 1 September 2016, further changes will take place from 1 September 2018, details of which are set out below.
From 1st September 2016 any employer who asks an employee to retire at a lower age than the Social Security pensionable age will need to justify retirement in the same way as any other act of direct age discrimination.
Before an employer makes any decision to dismiss an employee on the grounds of retirement they should ensure that:
- employees understand and are fully aware of the employer’s retirement age (this would be expected to be at least the States’ pensionable age as anything lower will need to be justified);
- at the proposed date of retirement the employee must be of the eligible age or over;
- between 12 and 6 months prior to the proposed retirement date the employer has commenced a retirement procedure; and
- the employer terminates the employee’s contract on the proposed date of retirement.
There will be a period of transition until 1st September 2018 whereby the above will apply allowing an employer to set a retirement age at the pensionable retirement age or above and this will not be an act of age discrimination. After September 2018 however, this exception will fall away and a requirement by an employer for an employee to retire at any age will be an act of direct discrimination which could also result in a potential unfair dismissal claim.
Direct and indirect discrimination
Employers will be found to have indirectly discriminated against an employee because of their age where a provision, criterion or practice during employment is applied to the particular employee and other colleagues, which results in that employee, and others of that age or age group being put at a disadvantage when compared to other persons. The defence for the employer in relation to indirect discrimination is exactly the same as that for direct discrimination (in respect of age discrimination only), i.e. the decision was a proportionate means of achieving a legitimate aim.
Claims of age discrimination will also arise under additional acts of discrimination, such as harassment or victimisation. A claim of victimisation in terms of age discrimination may come about where, for example, a person is treated less favourably as a result of making a complaint under the law, or issued proceedings against a person under the law.
The proportionality defence
As a result of the change to the discrimination law, employers will no longer be able to have internal policies forcing staff into retirement at a particular age unless the employer, in its defence, is able to show that the decision was justified, i.e. the decision was a proportionate means of achieving a legitimate aim. But what does this mean?
The Tribunal will consider firstly whether the decision was proportionate. This would include an examination of whether the retirement contributed towards the legitimate aim; whatever that may be according to the employer. Furthermore, the employer must be able to evidence that the retirement itself is achieving the particular aim. The employer needs to ensure that the aim itself is of enough importance to outweigh any potential unfair or discrimination claims. The employer must ensure however that the legitimate aim tallies with its real needs; retirement on the basis of saving the employer money will not be considered legitimate, for example. However, economic factors such as business needs and efficiency are likely to be considered legitimate aims.
It will also be permitted to retire a person before the pensionable age (or at any age from September 2018), on health and safety grounds if it can be shown that the employee’s age puts himself or others at risk or danger. For example, someone with a labour intensive position, whose role in the workplace may be pivotal to the safety of others. If that person’s capability to perform their role is reduced because of their age then as a result the health and safety of that person and others around him would be at risk. In this circumstance the employer would be justified to retire the employee, as the decision would be a proportionate means of achieving a legitimate aim.
Generally there is no defence to claims of direct discrimination. Allowing the employer a defence to a claim of direct discrimination makes age discrimination different to other protected characteristics under the law.
Not all circumstances will automatically amount to age discrimination. There are of course some exemptions to the application of age discrimination. One particular amendment allows a States’ policy or Ministerial decision that applies an age-based criteria for the purposes of promoting employment or other opportunities or providing access to facilities and services. Another amendment allows age based discrimination in relation to what benefits employees may receive in their employment based on their length of service and does not amount to an act of indirect discrimination.
Until 1st September 2018 an employer will not be in contravention of the law if he takes in to account that a person is nearing retirement age when deciding who to recruit, who to promote, who to move to another position, or what training should be provided to any employee. For the purposes of this part of the law, a person is considered to be ‘nearing retirement’ if the person’s age is not less than six months short of pensionable age (or if higher, the retirement age set by the employer).
Making a claim
For any claim of discrimination or conduct that is prohibited by the law, the complainant will have 56 days from the last occasion of alleged discrimination to present their claim to the tribunal. If, after considering the evidence of both parties, the tribunal concludes that discrimination has taken place, the tribunal may then do one or more of the following:
- make a declaration of the rights of both sides;
- order a payment of compensation (up to maximum of £10,000 to include any amount awarded for hurt and distress); or
- make a recommendation that the employer take action which will alleviate the adverse effect of the discrimination on the applicant.
In summary, it is important for employers to take note of the impending changes to the Discrimination Law firstly in September this year, and secondly in September 2018 to avoid any discrimination claims or potential unfair dismissal claims that may arise in connection with an employee’s age. From 1 September 2016 all employers must be prepared to justify their reasons for requesting any employee retire at an age lower than the Social Security pensionable age. Employers should then diarise changes due in September 2018 when they will be required to justify their reasons for requesting an employee retire at any age.
As always, employers should ensure that a fair procedure is always followed in any decision to dismiss an employee to avoid any unnecessary claims being brought against them.
How can Viberts help?
If you need help or advice on how to apply these changes in your organisation, call Lara Zambon on: +44 (0) 1534 632255 or email firstname.lastname@example.org.