URGENT UPDATE
LAW has been advised by the Department for Social Security that the Minister ‘might propose’ further change(s) to the draft Age Discrimination Regulations in relation to retirement age as a result of feedback on its public consultation on the same – presumably as a result of pro-employee/ anti-discrimination lobbying. Further, the Department for Social Security has confirmed that legislative time constraints mean it will not go out to further formal consultation on any such proposed changes. Accordingly, it would appear you have a very short window of opportunity to respond to the proposed further and new changes as the public consultation exercise ends this week, 26 February 2016.
LAW’s survey on the Age Discrimination Regulations only invited your feedback on the draft regulations, i.e. on the proposed new law. Naturally, it did not invite your feedback on law which had yet to be proposed. LAW has listed below what it understands is now being proposed and invites you to respond on these points immediately to LAW (for inclusion in its collective response) or by 26 February 2016 direct to the Department of Social Security. Should you have any comments on the process of the consultation exercise, you are invited by the Department of Social Security to contact the Communications Unit.
PROPOSED AMENDMENT
Current proposal: Under the current draft Age Discrimination Regulations:
1. employers are able to retire employees at pensionable age (as defined by statute at any given time: currently 65, set to increase) or higher (where the employer has a higher retirement age policy) without the risk of facing an age discrimination claim; however
2. employers who retire employees under pensionable age must:
a. have a policy which sets out such a retirement age; and
b. be able to objectively justify the age at which retirement is set
if they are to avoid a claim of direct age discrimination.
3. additionally, the main employment law on upper age limit for making a claim of unfair dismissal will be amended to make pensionable age (or higher) the new upper age limit i.e. employees will only be able to claim unfair dismissal for dismissals which occur before pensionable age (or their employer’s higher retirement age if it has one).
Example: X Ltd has a retirement age of 65 for its manual workers on the basis that their strength and stamina will decline after this age, they will become less able to do their job and have an increase of injury. X Ltd’s retirement policy is lawful and there can be no claims for either age discrimination or unfair dismissal.
New proposal: if changed, the Age Discrimination Regulations might provide:
1. employers who retire employees at any age must:
a. have a policy which sets such a retirement age; and
b. be able to objectively justify the age at which retirement is set
if it is to avoid a claim of direct age discrimination;
2. employers are able to retire employees at 72 or higher without the risk of facing an age discrimination claim;
3. additionally, the main employment law on upper age limit for making a claim of unfair dismissal will either be repealed or amended to make 72 the new upper age limit i.e. employees will be able to claim unfair dismissal either regardless of age or up until but not after they attain the age of 72. It is unknown what is being proposed here;
4. conversely, employers will be able to defend any dismissal on grounds of age through a new 6th potentially fair reason of ‘retirement’. It is unknown whether the Regulations will prescribe a ‘pathway’ for due process or indeed a separate right whereby employees will have the right to request to continue working in all retirement cases and employers will have a duty to consider that request.
Example: X Ltd has a retirement age of 65 for its manual workers on the basis that their strength and stamina will decline after this age, they will become less able to do their job and have an increase of injury. X Ltd’s retirement policy is unlikely to be justified under the Age Discrimination Regulations or fair under unfair dismissal law. X Ltd’s concerns could be easily addressed in a less discriminatory way by subjecting its workers to regular fitness tests (though fitness test requirements bring their own problems).
COMMENTARY
The current proposal is more certain for both employers and employees but it is arguably more favourable to employers and less flexible for employees. Employers can lawfully retire employees at pensionable age (or higher) in the knowledge that they will not face a claim of age discrimination. However, if an employer wanted to retire an employee pre-pensionable age, they would have to justify their decision. This can operate to allow those wanting to work beyond a low retirement age (of say 55 or 60) to do so. This removes barriers to work by allowing all working people to remain in full employment but only up until pensionable age.
The new proposal is arguably less certain all round, and is arguably less favourable to employers and offers more protection for employees as the retirement barrier to work is either removed completely or pushed back until employees are 72. This removes barriers to work more widely and creates scope to retire at will. However, the flip side for both parties but particularly the employer, is knowing whether their justification for any set retirement age (under 72) defeats a claim of age discrimination. They will not know this unless or until they get to Tribunal. In practice, this could mean a Tribunal claim for every dismissal relating to retirement until we get a body of consistent case law in Jersey on which employers can rely.
The new proposals are similar to the UK position. Employers in the UK encountered two main problems: they had difficulty in showing an objective justification which resulted in an ageing workforce, and incurred additional management time burden dealing with due process for both dismissals and the very prescriptive duty to consider requests to remain employed.
