A LEADING employment lawyer has warned businesses face a ‘litigation minefield’, following Government changes to the Default Retirement Age (DRA).
Peter Sharp claims employers may find it safer and cheaper to dismiss staff on capability grounds rather than taking the retirement route.
Says a spokesperson: “Changes to the DRA, effective from October, mean employers can no longer require staff to retire on reaching the age of 65. A compulsory retirement age can only be used by employers if they can ‘objectively justify it’.”
Mr Sharp said: “The net effect of these changes is to reverse the initiative for the timing of retirement, taking it out of the hands of employers and switching it to employees.
“An employer will firstly have to objectively justify any retirement age and the ACAS Guidance says, candidly and correctly, that this will be difficult. Secondly, the employer will have to justify any decision to refuse a request to stay on.
“It is a litigation minefield and get any of this wrong and the risk is an award of compensation, including compensation for hurt feelings. More worryingly for employers, there is no cap to the level of compensation.”
Mr Sharp believes employers will find it difficult and should best avoid dismissing staff on grounds of retirement in the future.
He said: “Even a botched unfair dismissal on grounds of capability will generate less risk – the employee is unable to get compensation for hurt to feelings and the level of compensation is subject to a cap.
‘The bottom line is that in terms of risk, I see retirement as a closed door as a basis of dismissal and dismissals will have to be on some other ground, most obviously capability.”
The spokesperson added: “Mr Sharp said the temptation for businesses will be to find some means to get employees to elect to retire, but cautioned that attempting to induce retirement could be seen as indirect discrimination.
“Even if an employee agrees to retire and the agreement is regulated by a Compromise Agreement, this would not prevent the retired employee applying for a subsequent vacancy, and if not short listed or interviewed, could claim age discrimination, arguing their knowledge of the company better qualifies them for appointment than other candidates.
“Employers will also have to review recruitment policies as they will no longer be able to discount job applications from anyone was is 64 years and six months old, as was allowed under the previous regulations.”
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