The Legal Fundamentals of Dealing with Retirement

If you one or some of your employees are nearing retirement, you need to ensure that you are familiar with the legal requirements surrounding it. Our systematic guide Your Requirements will prove helpful as will the information below.

Changes to the state pension age

The age at which people can draw their state pension is changing. Currently it is 60 for women and 65 for men who were born before or on the 5^th April 1950. Women who were born on or after the 6^th April 1950 are seeing their state pension age gradually rise to match that of men. Further increases are possible under current legislation and by October 2020, the state pension age, for both sexes, will be 66.

Using an employer justified retirement age

By law a person can now work beyond 65 should they wish to do so. However, it is possible for certain employers to set a compulsory retirement age. That age can be above or below 65. However, to do this employment restriction an employer has to demonstrate that doing so is a balanced way to achieve a legitimate aim. It is important to realise that proving this is the case is not easy; setting an employer justified retirement age is not a step that should be taken lightly.

Forcing people to retire at a certain age is a form of dismissal. If you do not have a legitimate reason for setting up and enforcing an employer justified retirement age you could end up having unfair dismissal claims brought against you.

Firms without an employer justified retirement age

If your firm does not have an employer-justified retirement age, using retirement to dismiss an older employee could be seen as unfair or discriminatory.  Regardless of the age of an employee, you can only use the fair grounds for dismissal laid out in the Employment Rights Act to terminate their employment. That is to say, on grounds of capability, conduct, redundancy, illegality or another substantial reason.

The use of retirement by mutual consent

It is sometimes possible for an employer and employee to come to a mutual agreement regarding retirement. However, a firm needs to be able to prove that the agreement is genuine. Neither of the parties, especially not the employee, must be coerced or pressured into such an agreement. If they are, they could potentially sue for unfair dismissal and ask for statutory redundancy pay.

Any firm that forces someone to leave or retire regardless of their age is guilty of unfair dismissal. The only way to avoid an employment tribunal is to have a legal reason to dismiss someone and to follow a fair procedure when doing so.

Understanding insured benefits

An employer who provides assured benefits, such as life assurance or medical insurance, to their employees can cease to provide them to those who have reached the state pension age. Currently for men this is 65 and for women 60, but this is changing. For more information, see the section on State Pension Age.

If you want to learn more about retirement call 0207 381 8111 or send the Hylton Potts legal advice team an email.