Employers need to treat capability issues uniformly across an organisation to avoid discrimination
The number of UK workers over 65 has increased dramatically in recent years, from a total of 753,000 in 1993 to 1.4 million in 2011. The UK Government abolished the default retirement age (DRA) last April, which means an employer can no longer force an employee to retire at 65 (or at any any other age) unless the company can objectively justify this. Should an employer choose to retain a fixed retirement age, they need to be able to satisfy a tribunal that the age they’ve chosen is both appropriate and necessary.
Any retirement dismissal is now discriminatory on age grounds, unless an employer can justify it objectively. And to avoid unfair dismissal claims, employers need to be able to demonstrate to a tribunal that any dismissal, including that of workers nearing, or over, pensionable age, is fair for one of the five potentially fair reasons under section 98 of the Employment Rights Act (1996).
The most likely course of action for an employer that hasn’t retained a retirement age, but wants to dismiss an older worker, is to rely on capability as the reason for dismissal under section 98. As well as identifying a fair reason, an employer has to show it has undergone a fair procedure in effecting the dismissal. For a capability dismissal this would include undergoing an effective performance management process with the employee.
Older workers may sometimes be perceived as having declining health or ability. However, an employee’s age should make no difference to the capability procedure adopted. Employers should deal with any performance or health issues in the same way for all employees, regardless of age, to avoid discrimination claims. In addition, employers should also avoid focusing discussions about future aspirations only on workers in certain age groups, which would also be classed as discriminatory.
Employers should avoid not dealing with performance or capability issues in order to preserve older workers’ “dignity”. For example, in the case Newey v Sainsbury’s Supermarkets (ET/2514387/09), decided under the age regulations (now superceded by the Equality Act 2010), the employer suggested early retirement to an older under-performing employee as an alternative to undergoing a capability procedure. The tribunal’s finding was that this course of action constituted age discrimination.
ACAS guidance for employers, Working without the default retirement age, is useful when employing – or dismissing – older workers. It focuses on how to handle discussions on workers’ future plans, or on performance issues.
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