Serious "drafting error" in Regulations repealing retirement age provisions

Consultant editor Darren Newman explains why, under the current wording of the draft Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011, the transitional provisions do not protect the retirement dismissal of an employee that takes effect on or after 6 April 2011, but where the employee reached the age of 65 before this date.

I had genuinely thought that the process of abolishing the so-called "default retirement age" was straightforward. The Government had been pretty clear as long ago as last summer just how the right to sack 65-year-olds would be phased out. Employers would be entitled to give notifications of retirement up to 5 April 2011 and the last date for a retirement dismissal would be 30 September. Certainly some employers felt that the timetable was too short and asked for a delay – but there was no reason to doubt what the timetable would be.

Then rumours started to circulate that, in some circumstances, a retirement could lawfully take effect as late as April 2012. It seemed that there was a concern that an employer giving 12 months’ notice of retirement in the weeks before the Regulations came into force would find that the notice would retrospectively become unlawful if the dismissal took place after 30 September. Acas changed its online guidance to indicate that any valid notification given before the Regulations came into effect would remain lawful provided that the employee had reached the age of 65 by the end of the transition period (30 September 2011). That represented a change in policy by the Government, which in its consultation (Phasing out the default retirement age (PDF format, 440K) (on the BIS website)) had specifically provided that the transitional arrangements would apply only where "the date of retirement falls before 1 October 2011". In its response to that consultation (Phasing out the default retirement age: Government response to consultation (PDF format, 111K) (on the BIS website)), the Government said that it remained "of the view that the basic six months’ minimum notification period is the time period that is appropriate to ensure fairly balanced transitional arrangements". So it looked as though there was a minor U-turn in the offing. Interesting enough, but not something that would cause employers any additional problems.

Then we saw the draft Regulations. They weren’t published exactly, but became available online through unofficial sources and had clearly been laid before Parliament (they have since been published on the UK legislation website). At first the focus was on the new exception that the Regulations created in relation to insured benefits – but then somebody noticed how the transitional provisions had been phrased. The Regulations repealed all protection for retirement dismissals from 6 April 2011. To be lawful, any retirement from that date onwards would have to fall within the transitional provisions, set out in reg.5. This provides that notification of retirement has to be given before the date that the Regulations came into force (6 April) and also requires that the employee must "attain the age limit during the period that begins with [6 April 2011] and ends with 30 September 2011" (reg.5(1)(b)).

It is easy to miss the significance of this wording, but it causes a huge problem for employers. What it means is that any retirement that takes effect from 6 April onwards will not be protected if the employee is already 65 (or the employer's higher normal retirement age) by that date. The Regulations have completely ignored the possibility that an employer may seek to retire an employee at some point after his or her 65th birthday (or the birthday relating to the higher normal retirement age).

For example, an employer may have decided to retain a particular employee beyond the age of 65, but keep his or her employment under regular review. Under the law as it currently stands, the employer retains the right to retire that employee at any time, provided that the rules on notification and the employee’s right to request a deferral are met. Suppose, in such a case, the employer gave the employee six months’ notice of an intended retirement date in December 2010, with the retirement due to take effect in June 2011. Under the Regulations, as currently drafted, that retirement would not be protected and the employee would be able to sue for age discrimination and unfair dismissal. While the employee has reached retirement age before 1 October 2011, the employee has not attained that age between 6 April and 30 September as required by the Regulations.

This has to be a drafting error. It cannot possibly be a deliberate policy decision. If these Regulations take effect it will mean that, when the Government confirmed in January 2011 that it would abolish the default retirement age from 1 October 2011, it was already too late for employers to give six months’ notification of retirement to employees who would reach 65 before 6 April 2011. It is simply inconceivable that the Government has deliberately trapped employers in this way. At the very least it would have made an announcement about such a radical change in policy. It would then have explained why it had decided that employers should no longer be allowed to retire people who had already reached retirement age, but would be allowed to retire people who would reach retirement age between 6 April and 30 September 2011.

It is also worth noting that the Acas guidance on the transition (in Working without the default retirement age (PDF format, 856K) (on the Acas website)) assumes that all that is required is that the employee reaches retirement age before 1 October 2011. Acas does not suggest that employees who reached retirement age before 6 April are excluded.

So let’s assume that this is a mistake and that the draft Regulations will be withdrawn and replaced by a new set, with a suitable amendment made. That won’t be difficult. All we need is for reg.5(1)(b) to require that the employee "will have attained the age limit before 1 October 2011" and the problem is solved. However, if the mistake is not rectified, or if the Government tries to argue that the Regulations do not mean what they quite clearly say, then chaos will ensue.

Even if ultimately no harm is done, I hope that the Government learns some lessons from this shambles. Clearly it would have been better if the Regulations had been drafted earlier and published before being laid before Parliament. We could then have pointed out the error much sooner and it could have been corrected with the minimum of fuss.

Even more importantly, the Department for Business, Innovation and Skills (BIS) needs to be faster on its feet. At the time of writing there is still no official word from it about either the publication of the draft Regulations or the controversy that has been raging about them for almost a week. Rumour and gossip have been circulating online as employers (and their advisers) try to decide whether to gamble on the Regulations being amended or to withdraw current notices of retirement. A swift and authoritative word from BIS could have resolved matters one way or the other almost immediately. That there has still been no such word is inexplicable and unacceptable. Even if this mess is sorted out once Parliament returns next week, ministers and officials have some serious explaining to do.

mailto:perspective@irsonline.co.uk