End game

The Government has succeeded in persuading the High Court that providing for a default retirement age in the Employment Equality (Age) Regulations Act (2006) was not an incorrect implementation of the Equal Treatment Directive.

This decision was however apparently only made on the basis that the government said that it was bringing forward its review of the default retirement age.  Consultation on this issue is due to be completed by 1 February 2010.

The age regulations were designed to prevent decisions or assumptions being made about employees solely on the basis of their age, and recognise that people of the same age have different capabilities.

The default retirement age however allows a fixed point in time at which each employee’s continuing employment can be reviewed, without employers feeling that they risk an age discrimination claim if they feel that the employee is no longer capable of doing the job, or if they need to promote and encourage other employees in their organisation.

The Heyday case is the latest in a series of cases brought by unions and other groups against the Government arising out of the way in which the Government has implemented EU anti-discrimination legislation.

What happens if the default retirement age is repealed?

The decision in Heyday gave strong indications that the default retirement age may either go altogether (or may be changed to a different, higher, age).

Employers and in-house counsel should now consider how (in particular) not having a default retirement age at all will affect their management of older employees.

If there is to be no statutory default retirement age at all, employers can choose either to:

• Maintain retirement ages of their own for all (or certain specific) jobs within their organisation; or
• Do away with set retirement ages altogether.

Forcing people out at a set age would amount to prima facie age discrimination, unless the employer could show that having a set retirement age for a particular post was justified. 

In those circumstances, it would be critical for employers to be able both to show how a set retirement age related to the social aims identified by the Government (or any specific aims relevant to the employer or to the specific position), and to justify each specific retirement as being a proportionate way of achieving one or more of those aims.

This would be difficult for employers, particularly before any case law developed.

If in the absence of a statutory default retirement age an employer chose not to maintain set retirement ages, that employer would be likely to face health and safety issues where employees perhaps try to mask ill-health or decreasing dexterity, mobility or memory in fear of being dismissed. 

If an employer were to have any concerns about whether an older employee was continuing to perform as well – or as safely – as before, it would need to deal with those concerns under the internal capability process.

This would require managers to change their approach, where they may before have avoided performance-managing long-standing employees as they approached their retirement.

Any such process would need to be handled extremely carefully and sensitively, with the knowledge that the employee could bring an age discrimination claim arising out of any decisions made during that process.

In-house counsel will no doubt be acutely aware of the difficulties in defending claims based on capability dismissals, particularly where the former employee argues that the process was mismanaged and the dismissal was premature.

The real burden however is likely to fall on the shoulders of human resources departments, who would need to ensure that procedures were clear and transparent;  that managers were trained to deal with capability issues and to seek advice in dealing with employees before a problem arose; that proper detailed investigations were carried out (including as to the employee’s medical condition, if required); and that everything was documented and recorded carefully.

Employers would of course also be able to try to rely on the justification defence against any age discrimination claim brought. 

The Equality Bill

To add to the current uncertainty, the Equality Bill (which is designed to codify all discrimination law) is planned for implementation in 2010.  Age UK and the Equality and Human Rights Commission (which intervened in the Heyday case) have both called for the default retirement age to be repealed by the bill. 

As this may delay the implementation of the bill, it is not clear at this stage that the Government will deal with the issue in the bill.

Are other challenges likely?

It is unlikely that other areas of discrimination law will develop in quite the same way, as there are very few statutory exceptions to discrimination in other legislation (and where there are such exceptions, they have been in place for some time).

Employers and in-house counsel should however be aware that each new piece of discrimination legislation is scrutinised by lobbying groups, who have in the past demonstrated a clear willingness to challenge legislation either on the basis that it does not comply with the underlying EU Directive, or that it breaches human rights laws. Some of those challenges have succeeded, whether directly or (as in this case) indirectly.

Kate Miles and Charles Pallott are partners at Ashfords