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The finalised Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 are now out04 March 2011Subject : NewsN.B. This is a revised version of the article originally reported here.
The draft regulations phasing out the default retirement age (DRA) have been finalised and were put before Parliament on 1 March 2011. This article summarises the effect of the Regulations. The Regulations can be found at the end of this article.
In the long term the new Regulations remove the exceptions that currently say it is not age discrimination to retire someone and that retirement is a potentially fair reason for dismissal. However, there are some transitional provisions. The Regulations also provide a new exception allowing an employer to limit access to insurance or related financial services to employees under 65.
The Regulations (coming into force on 6 April 2011) will delete paragraphs 8 and 9 of Schedule 9 to the Equality Act 2010 which currently say:
it is not age discrimination to dismiss someone at or over age 65 if the reason is retirement; and
it is not age discrimination to refuse to offer someone employment who will reach retirement age within 6 months time The Regulations will also delete S.98(2)(ba) of the Employment Rights Act 1996 which says that retirement is a fair reason for dismissal and the associated provisions about when retirement is taken to be the reason (S.98ZA – 98ZH).
Finally, the Regulations will delete Schedule 6 to the Employment Equality (Age) Regulations 2006 which sets out the employer’s duty to inform the employee of its intention to retire him/her and the duty to consider requests to stay on.
But watch out for the transitional provisions...
The regulations are subject to transitional arrangements that will allow retirements to take place on or after 6 April 2011 in certain circumstances. In order for the transitional provisions to apply:
the employer must reach 65 (or the employer’s normal retirement age if later) by 30 September 2011; and
the employer must give notice of retirement to the employee under the DRA notification procedures on or before 5 April 2011.
Note that the employee’s right to request an extension will still apply. The regulations provide that if an employee makes a request to stay on beyond retirement, an extension of up to six months can be added to the retirement date notified under the transitional provisions. (An extension of any longer than this would mean that the retirement would fall outside the transitional provisions – making it unlawful unless justified.) The upshot is that the long-stop date for retirements under the transitional provisions will be 5 October 2012 – i.e. six months after the twelve-month notice of retirement that must be given by 5 April 2011 at the latest. This is a change from the Government’s initial position, which was that all retirements under the old procedure would end by October 2011.
Note: The original version of the regulations published on 28 February contained a major drafting error excluding people who are already 65 before 6 April 2011 from the transitional arrangements. This was corrected in the second version of the regulations put before Parliament on 1 March and is reflected in the final Regulations below.
The new Regulations replace the existing limited exception for an employer to provide life assurance for a period between an early ill health retirement and 65 (or normal retirement age) with a provision saying it is not age discrimination to provide access to ‘insurance or a related financial service’ only to employees aged under 65 (or state pension age, if greater).
While the state pension age is still 65, the exemption itself only applies to:
ceasing benefits at 65; or
restricting benefits to the under-65s.
It doesn’t expressly cover a situation where an employer already provides a benefit to age 70, for example. In that situation, a 71 year old could potentially bring a claim comparing herself to a 69 year old – this wouldn’t be covered by the exemption so the employer would have to justify in the normal way.
This may be an issue for employers who have extended cover for employees they’ve allowed to stay on under the duty to consider procedure.
The exemption is restricted to the insurance/service being provided pursuant to an arrangement between the employer and a third party – the classic insured benefit situation. (There’s a specific provision for employers who are in the insurance business, where they can provide their own product). So it won’t necessarily cover employers who self insure. Some self-insurance schemes are funded by the employer, but administered by an insurer – this might bring it within the exemption, but it’s not clear.
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The final regulations are below:
Made - - - - 2011
Coming into force - - 6th April 2011
A draft of these Regulations was laid before Parliament in accordance with section 2(2) of the European Communities Act 1972([1]) and approved by a resolution of each House of Parliament.
The Secretary of State is a Minister designated([2]) for the purposes of section 2(2) of the European Communities Act 1972 in relation to discrimination.
2.—(1) Schedule 9 to the Equality Act 2010 (work: exceptions relating to age)([3]) is amended as follows.
(a) in pursuance of an arrangement between the employer and another person, or (b) where the employer’s business includes the provision of insurance or financial services of the description in question, by the employer.
(4) The state pensionable age is the pensionable age determined in accordance with the rules in paragraph 1 of Schedule 4 to the Pensions Act 1995([4])..
3.—(1) The Employment Rights Act 1996([5]) is amended as follows.
(2) In section 98([6]) (fairness of dismissals: general)—
(a) omit subsections (2)(ba), (2A) and (3A), and
(b) in subsection (4), for “In any other case where” substitute “Where”.
(3) Omit sections 98ZA to 98ZH (retirement dismissals)([7]).
(4) In section 105 (redundancy) omit subsection (7IA)([8]).
(5) In section 108 (qualifying period of employment) omit subsection (3)(n)([9]).
(6) In section 112 (remedies for unfair dismissal: orders for compensation), omit subsections (5) and (6)([10]).
(7) In section 120 (basic award in certain cases), omit subsections (1A) and (1B)([11]).
4.—(1) Schedule 6 to the Employment Equality (Age) Regulations 2006([12]) (duty of employer to consider employee’s request to work beyond retirement) is revoked.
(a) notification in respect of that employment has been given under paragraph 2 or 4 of Schedule 6 to the Employment Equality (Age) Regulations 2006 before the date of the commencement of these Regulations, and
(b) that person has attained the age limit or will attain it before 1st October 2011.
(a) sections 98(2)(ba), (2A) and (3A), 98ZA to 98ZD, 98ZF to 98ZH, 105(7IA), 108(3)(n), 112(5) and (6) and 120(1A) and (1B) of the Employment Rights Act 1996,
(b) Schedule 6 to the Employment Equality (Age) Regulations 2006, and
(c) paragraph 8 of Schedule 9 to the Equality Act 2010.
(b) the normal retirement age in the case of the employment concerned.
(4) Despite this regulation—
(a) an employer may not issue a notification under paragraph 2 or 4 of Schedule 6 to the Employment Equality (Age) Regulations 2006 on or after 6th April 2011 in respect of the employment of a person to which this regulation applies; and
(b) an employee may not make a request under paragraph 5 of Schedule 6 to the Employment Equality (Age) Regulations 2006 on or after 5th January 2012 in respect of the employment to which this regulation applies.
(5) In this regulation, “normal retirement age” has the meaning given in section 98ZH of the Employment Rights Act 1996.
(6) This regulation does not apply to the employment of a person if section 98ZE of the Employment Rights Act 1996 would (but for regulation 3(3)) apply to a dismissal from that employment.
(b) section 98ZE of the Employment Rights Act 1996 would (but for regulation 3(3)) apply to a dismissal from that employment.
(a) sections 98(2)(ba), (2A) and (3A), 98ZE to 98ZH, 105(7IA), 108(3)(n), 112(5) and (6) and 120(1A) and (1B) of the Employment Rights Act 1996, and
(b) Schedule 6 to the Employment Equality (Age) Regulations 2006.
7. Despite regulation 3(6) and (7), sections 112(5) and (6) and 120(1A) and (1B) of the Employment Rights Act 1996 continue to have effect so far as necessary for the transitional provisions in Part 1 of the Schedule to the Employment Act 2008 (Commencement No.1, Transitional Provisions and Savings) Order 2008([13]).
8. Despite regulation 4, paragraphs 9, 12 and 13 of Schedule 6 to the Employment Equality (Age) Regulations 2006 (right of employee to be accompanied at meeting with employer) continue to have effect in a case where paragraph 9 of that Schedule applies immediately before the commencement of these Regulations.
9. Regulations 5 to 8 do not affect the general operation of section 16 of the Interpretation Act 1978([14]).
([1]) 1972 c.68.
([2]) S.I. 2002/1819.
([3]) 2010 c.15.
([4]) 1995 c.26; paragraph 1 of Schedule 4 was amended by the State Pension Credit Act 2002 (c.16), section 14, Schedule 2, Part 3, paragraph 39; the Welfare Reform Act 2007 (c.5) section 28(1), Schedule 3, paragraph 13; and the Pensions Act 2007 (c.22), section 13(1), Schedule 3, paragraph 4.
([5]) 1996 c.18.
([6]) Relevant amendments to section 98 have been made by S.I. 2006/1031, Schedule 8, Part 1, paragraphs 21 and 22.
([7]) Subsections 98ZA to 98ZH inserted by S.I. 2006/1031, Schedule 8, Part 1, paragraphs 21 and 23.
([8]) Subsection (7IA) inserted by S.I. 2007/825.
([9]) Paragraph (n) inserted by S.I. 2006/1031, Schedule 8, Part 1, paragraphs 21 and 24.
([10]) Subsection (5) was inserted by the Employment Act 2002 (c.22), section 34(1) and (3) and amended by S.I. 2006/1031, Schedule 8, Part 1, paragraphs 21 and 26. Subsection (6) was inserted by the Employment Act 2002 (c.22), section 34(1) and (3).
([11]) Subsection (1A) was inserted by the Employment Act 2002 (c.22), section 34(1) and (6) and amended by S.I. 2006/1031, Schedule 8, Part 1, paragraphs 21 and 28 and the Employment Act 2008 (c.24), section 20, Schedule, Part 1. Subsection (1B) was inserted by the Employment Act 2002 (c.22), section 34(1) and (6).
([12]) S.I. 2006/1031.
([13]) S.I. 2008/3232.
([14]) 1978 c. 30.