Retirement and the Employment Rights Act

The Employment Equality (Age) Regulations 2006 (SI 2006 No.1031) amended by s. 98 ZD of the Employment Rights Act 1996 provides that it is unlawful to discriminate against workers of any age. However, regulation 30 (2) allows employers to dismiss an employee without a redundancy payment when they reach the national retirement age of 65 or the mandatory retirement age set by the company. The dismissal will not amount to discrimination, provided the reason is retirement.

Section 98 (1) (b) of the Employment Rights Act 1996 also, lists retirement as one of six potentiality fair reasons for dismissal provided it follows the correct procedure set out in sch. 6, para.2 to the Employment Equality (Age) Regulations 2006. The following conditions must also be satisfied:

At the date of dismissal the employee must be at least 65 years old and if the employer has a normal retirement age, then at that date of the dismissal the employee must also be at or over their normal retirement age. So, if Roberts & Co normal retirement age was 70, they could not use retirement as a reason for dismissal until Mark is 70.

The contract of employment must not terminate before the intended date of retirement.

The employers must have followed the procedure set out in sch. 6, para. 2 to the Employment Equality (Age) Regulations 2006.

Retirement Procedure

When dismissing an employee for reasons of retirement, the employer must give the employee written notice of the proposed retirement date it and inform the employee of their right to ask to continue in employment beyond their retirement date. The notice must be given not more than twelve months and not less than six months before the proposed retirement date.

Based on the facts presented it would appear that 65 is Roberts & Co normal retirement age and as such they can legitimately can use retirement as grounds for Marks dismissal. However, If Roberts & Co fails to follow the retirement procedures Mark would have grounds to claim for unfair dismissal and age discrimination.

Mark can therefore request to work beyond his 65th birthday (sch 6. para 5, Employment Equality (Age) Regulations 2006). This must be in writing three to six months prior to his intended retirement date and should include whether he wishes to stay for on indefinitely or for a fixed period. Whilst, Roberts & Co have a duty to consider such a request they have no legal obligation to agree to it and are not required to provide a reason for not doing so.

The European Court of Justice in the case of Palacios de la Villa v. Cortefiel Servicios SA [2007] IRLR 989 held that national laws for compulsory retirement are not automatically excluded under the Equal Treatment in Employment and Occupation Directive (2000/78/EC). The national council of ageing challenged the lawfulness of the default retirement age in the case of R v. Secretary of State for Business, Enterprise and Regulatory Reform C-388/07 [2009] IRLR 373, ECJ. The European Court of Justice has asked the High Court to decide whether the government can justify having a retirement age of 65 beyond which an employee cannot claim unfair dismissal or age discrimination if the employer follows the correct procedures.

An option that Mark could consider is lodging a claim of unfair dismissal or age discrimination with the tribunal and request that the case is stayed pending the High Courts decision which is due some time this year.

If Mark is required to retire when he reaches his 65th birthday he will not be entitled to a redundancy payment (s.109 and s.159, Employment Rights Act 1996).

Q2:

Redundancy

Eligibility

Hazel is an employee who has worked for Roberts & Co for 17 years, therefore her employment status satisfies the minimum requirement of two years continuous employment (s.155, Employment Rights Act 1996) ending with the ‘relevant date’ of termination (s.145, Employment Rights Act 1996). She does not appear to be a member of an excluded class (s.199, Employment Rights Act 1996).

Therefore, Hazel is eligible to claim for a statutory redundancy payment.

Dismissal by reason of redundancy

Section 139 (1) (b) (ii) of the Employments Rights Act 1996 provides that, ‘an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or attributable to the fact that his employer has ceased or intends to cease…to carry on that business in the place where the employer was still employed…have ceased or diminished or expected to cease or diminish’.

In Bass Leisure Ltd v. Thomas [1994] IRLR 104, the Employment Appeal Tribunal held that an employee’s place of work for the purpose of redundancy is a question of ‘fact’, taking into account where the employee ‘actually’ worked. Terms such as mobility clauses that allow for employees to be moved from one place to another are irrelevant for this purpose. The decision in Bass Leisure Ltd v. Thomas [1994] was approved by the Court of Appeal in High Table Ltd v. Horst [1997] IRLR 513. The current position in relation to establishing an employee’s place of work and the effect of any mobility clauses is as follows:

If an employee has only worked in one location prior to the dismissal, then that is the employee’s place of work, regardless of any mobility clause in their contract. If the employee is dismissed because of a reduction in the work at that location, then the employee is dismissed by reason of redundancy.

If an employee has worked at several locations prior to the dismissal, then the place of work is still to be established by factual enquiry, taking into account any contractual terms that might assist in establishing the employee’s place of work. When the place of work is ascertained, any reduction in the work at that place will result in a redundancy situation and the dismissed employee be entitled to a redundancy payment.

Applying the above, the closure of Hazel’s ‘place of work’ would appear to satisfy s.139 (1) (b) (ii) of the Employments Rights Act 1996. Therefore, Hazel has been dismissed on grounds of redundancy.

Offer of suitable alternative employment

However, as Hazel has been offered the same job with a small salary increase, on the same terms at the new premises, her refusal to move may deprive her of any right to a redundancy payment (s. 142(2) – (4), Employment Rights Act 1996).

Unreasonable refusal of suitable alternative employment

The burden lies with Roberts & Co to show unreasonable refusal. Hazel may have reasonable ground for refusing to move to the new premises due to her personal circumstances. In particular the fact that she provides care for her elderly mother and would be unable to do so at the new premises.

Ultimately it will be a question of fact for the tribunal to decide whether Roberts & Co offer was a reasonable one and Hazel’s refusal to relocate was unreasonable. If Hazel’s refusal to relocate was considered reasonable she would be entitled to claim a redundancy payment.

Redundancy Payment

Hazel’s redundancy payment will be calculated on her age, length of continuous service, up to a maximum of 20 years (s.162 (3), Employment Rights Act 1996) ending with the relevant date and a ‘weeks gross pay’ that Hazel was entitled to in the week ending with her dismissal (s.221, Employment Rights Act 1996), subject to the current statutory maximum of £380.

Working back from the date of termination of employment, Hazel is entitled to:

a) One-and-a-half weeks’ gross pay for each complete year of continuous employment in which she was 41 or over.

b) One weeks’ pay for each earlier year in which she was 22 or over.

Hazel’s redundancy calculation will be:

(a) 1.5 x 6 (years) x £370 = £3330

(b) 1x 9 (years) x £370 = £3330

Hazel will be entitled to a redundancy payment of £6660.00.

Q3:

Hazel may also have grounds to claim wrongful dismissal and unfair dismissal.

Wrongful Dismissal

Wrongful dismissal is a common law action for a breach contract. Qualifications

Any worker with a contract of employment regardless of their length of employment is eligible to bring a claim for wrongful dismissal at a employment tribunal, County Court or the High Court.

Hazel has 3 months from the termination of employment to submit a claim to a tribunal. This will only be extended if it is not reasonably practicable to do so. If Hazel submits her claim in the civil courts she will have six years in which to do so.

Can a Dismissal be indentified?

Section 86 of the Employment Rights Act 1996 provides that an employee will be judged to be wrongfully dismissed if he or she has been dismissed without the period of notice or without a payment in lieu of notice.

Applying this to the facts Hazel has clearly been dismissed without notice by her manager for refusing to relocate to the new company premises.

Reason

It is important to note that the reason for the dismissal is irrelevant in a claim for wrongful dismissal (Addis v. Gramophone Co Ltd [1990] AC 488. The only time that an employee can be dismissed without notice or without a payment in lieu is when they are guilty of gross misconduct (s.98, Employment Rights Act 1996). However, Hazel’s refusal to relocate will not amount to gross misconduct.

Remedy

The usual remedy for wrongful dismissal is damages. In certain circumstances the court may award an injunction to prevent a wrongful dismissal taking place.

Hazel claim for damages is limited to the pecuniary loss she has suffered as a result of not being given the required statutory notice. Hazel will be entitled to compensation equal to the net value of her salary and any benefits such as holiday pay, bonuses etc that she would have received had she been given her full period of notice (Hadley v. Baxendale (1854) 9 Exch 341 & Addis v. Gramophone Ltd [1909] AC 488).

If Hazel had a fixed term contract of employment, she will be entitled to the salary and any benefits that should have been paid during the remainder of the contract (Boyo v. London Borough of Lambeth [1995] IRLR 50).

A tribunal can award a maximum of £25,000 for damages. Compensation in the civil court is unlimited.

Unfair Dismissal

Unfair dismissal is the statutory right for an employee not to be unfairly dismissed by their employer (s. 94 (1), Employment Right Act 1996).

Qualifications

Hazel has worked for Roberts & Co for 17 years; this satisfies the requirement of employee status and the minimum requirement of one year’s continuous employment. It does not appear that Hazel is a member of an excluded class of employees. Therefore, Hazel is eligible to bring a claim for unfair dismissal at an employment tribunal.

Hazel has 3 months from the effective date of termination of employment to submit a claim to a tribunal (s.112 (2) (b), Employment Rights Act 1996). This will only be extended if it is not reasonably practicable to do so.

Dismissal

An employee will be dismissed if ‘the employer, either with or with out notice terminates the contract (s.95 (1) (a), Employment Rights Act 1996). Therefore, based on the facts Hazel has clearly been dismissed.

Reason

Roberts & Co must prove that Hazel’s dismissal falls within one of the six potentially fair reasons for dismissal (s.98, Employments Rights Act 1996). They could argue that Hazels dismissal was fair on the ground of incapability (s.98 (2) (a), Employments Rights Act 1996). In Abernethany v. Mott, Hay and Anderson [1974] ICR 323, the employee refused to relocate and was dismissed. The Employment Appeal Tribunal held that the employee had been fairly dismissed on grounds of incapability (not redundancy as originally submitted). If they cannot prove that the dismissal was fair then it will automatically be unfair dismissal.

Reasonableness

If Roberts & Co can show that Hazels dismissal was for a permitted reason, it will be for the tribunal to decide whether the employer acted reasonably in dismissing the employee (s. 98 (4), Employments Rights Act 1996). The question for the tribunal to determine is whether the respondent’s decision to dismiss the employee fell within the band of reasonable response of a reasonable employer. If the tribunal decides that a reasonable employer could regard the circumstances as sufficient to justify the dismissal then the dismissal will be fair (Iceland Frozen Food Ltd v. Jones [1982] IRLR 439). This approached was re-sated by the Court of Appeal in the joined case of Post Office v. Foley; HSBC (formerly Midland Bank v, Madden [200] IRLR 827.

Remedy

If Hazel claim is successful, the tribunal could award the following remedies:

Reinstatement or re-engagement.

The tribunal could order the Roberts & Co to take Hazel back into her old job or a similar job. In this case it would not be reasonably practicable to do so.

Basic Award

This is calculated in the same way as a redundancy payment (s.119, Employments Rights Act 1996). Hazel, will therefore be entitled to a basic award of £6600 (see Q2 for calculations).

Compensatory award

A compensatory award is based on the amount which the tribunal considers ‘just and equitable in all circumstances, having regard to the loss sustained by the complainant in consequence of the dismissal in so far as the loss is attributable to action taken by the employer (s.123 (1), Employments Rights Act 1996).

Hazel should be able to claim for:

Loss of net earnings from the date of dismissal until she started a new job.

Future loss of earnings, Hazel may be able to recover any difference in salary for a period that the tribunal consider appropriate.

Loss of any pension rights and fringe benefits.

Loss of statutory rights.

Expenses incurred whilst looking for work.

The current maximum compensatory award is set at £63,000.