Employers: how not to handle a retirement situation

employers-how-not-handle-retirement-employment-law

The case of J Peters v Rock Chemicals Ltd t/a Rock Oil provides a costly lesson for employers in how not to handle a retirement situation, says Ian Seabury, a director at Seabury Beaumont (who acted for the Claimant). Here, he discusses the case and what employers can learn from it.

Age discrimination is one of the newer forms of unlawful discrimination, first introduced in 2006, now of course contained in the Equality Act 2010. Age discrimination can take place at all stages of the employment life cycle, and the three main types can be detailed as follows:

Direct discrimination

Ian Seabury, director at Seabury Beaumont.

Treating someone less favourably because of their actual age, perceived age, or age of someone they are associated with. For example, an employee is refused promotion either because they look “too young” or indeed “too old”, when in fact they are in the same age group as a number of employees promoted in similar circumstances.

Indirect discrimination

A practice or policy of the employer applies to all, but particularly disadvantages people of a particular age. For example, a job advert stating a teaching vacancy would suit employees “in the first five years of their career” was held to be discriminatory against someone in their 60’s, as they were more likely to have over 5 years’ experience.

Harassment

Unwanted conduct related to age has the purpose or effect of violating an individual’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment. An employee might be constantly subjected to age related ‘banter’, for example “Having problems with your phone grandad, mobiles are for young people.” Constant comments or treatment of this kind may create such an environment over time.

Both direct and indirect discrimination because of someone’s age are capable of being objectively justified under the Equality Act, but the employer must show the treatment complained of, or practice or policy applied is “a proportionate means of achieving a legitimate aim.”

While in one case a compulsory retirement age of 65 for partners in a law firm was held to be proportionate to meet the legitimate aims of staff retention and workforce planning, in order to run an objective justification defence an employer should be able to show an element of conscious consideration before the event, backed up by evidence.

Older employees possess considerable work experience and life skills that can contribute massively to the workplace as a whole. However, the abolition of the default retirement age of 65 in 2011, coupled with an ageing population who wish to remain employed for longer, also presents issues for employers in respect of retirement and succession planning.

A fixed retirement age might only be justifiable in specific sectors, for example for health and safety reasons. In the general absence of a default retirement age, it is no surprise that tribunals have found age discrimination in cases where employers have sought to hide behind a redundancy or conduct dismissal when dismissing employees, when the real reason is in fact age.

J Peters v Rock Chemicals Ltd t/a Rock Oil

The case of J Peters v Rock Chemicals Ltd t/a Rock Oil, in which I acted for the Claimant, provides a costly lesson for employers in perhaps how not to handle a retirement situation.

Mr Peters, the Company Accountant, had made it clear he was not going to retire upon reaching the age of 65 in 2012. However, another accountant had been hired a year earlier and was working elsewhere in the business, introduced to others by management as Mr Peters’ successor.

Mr Peters subsequently went on sickness absence following a “hostile” internal meeting in March 2013, at which he was sworn at by Rock Oil’s Managing Director (the Chairman’s son). The fact he had been seen to print off guidance regarding his rights around retirement prior to the meeting only served to inflame the situation.

Rock Oil subsequently initiated an investigation and disciplinary proceedings against Mr Peters, primarily in relation to an historic HMRC fine, and fuel stock discrepancies, leading to his summary dismissal in January 2013.

The employment tribunal found that the reason for Mr Peters’ dismissal was that he had reached the age of retirement and management wanted him to retire. When he indicated he did not want to retire, the tribunal found management “trumped up” charges against him in what could only be described as a threatening manner, failed to follow the recommendations of two medical reports to facilitate his return to work; lied to him about his bonus and failed to carry out a fair and objective disciplinary procedure. The investigation and disciplinary hearing were conducted by father and son, with the dismissal appeal being heard by an external HR consultant, the Chairman’s daughter.

The tribunal also found that Rock Oil denied Mr Peters access to relevant information, and cherry-picked information that allowed them to paint a picture that would fit with the pre-determined decision to dismiss him. Management also gave “unreliable” evidence at the tribunal.

In November last year, the Tribunal awarded Mr Peters £182,256.72, including a Compensatory Award for over 15 months loss of earnings and benefits, an award for injury to feelings of £15,000 and a 12.5% uplift for Rock Oil’s failure to follow the Acas Code on Disciplinary and Grievance Procedures.

In the tribunal’s own words “the whole matter was a complete shambles”.

So how might the above situation be avoided?

Firstly, deal with the issue sensitively and honestly. There is case law that it will not be discriminatory to hold genuine retirement discussions with an employee, and an open discussion will often be an ideal way to introduce a topic that the employee may have some hesitation in raising themselves. Part time working, or working in tandem with a successor for a while prior to retirement, might be seen as options for both parties.

These types of discussion ideally should not be held in isolation. Why not bring up the subject at the employee’s appraisal, when discussing in general terms where the employee might see themselves in 1, 3 or 5 years’ time. Have an open conversation, but ensure that the appraising manager is aware of the issues that may arise, and appropriately trained to avoid any unhelpful remarks that might be used against them later.

Do not be afraid to address performance issues with older employees. However, be careful not to automatically assume that a lowering of standards is a result of age. As is often common, there may be a number of unrelated factors that need further investigation with the employee. Manage performance consistently, and in line with your capability procedure.

Likewise, ensure that any potential misconduct allegations are dealt with in line with your disciplinary procedure, and that disciplinary decisions are taken in a manner consistent with established employment case law and Acas best practice. Remember that an employer conducting itself unreasonably towards a long-serving employee will find it difficult in front of the tribunal to show that the reason for the treatment had nothing to do with the employee’s age, and is therefore discriminatory.

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