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Jumping the gun on retirement was age discrimination

20 August 2008

In a recent case an employer paid a heavy financial penalty for retiring an employee one day before his 65th birthday. The employment tribunal awarded the employee over £36,000 in compensation.

The case is a warning to employers that they must follow age discrimination law to the letter in order to avoid claims.

In the case of Plewes v Adams Pork Produce Limited, the employee’s contract stated that his retirement date would be the day before his 65th birthday. His employer followed the statutory retirement procedure but refused his request to carry on working beyond his retirement date. The employee was therefore compulsorily retired on 29 December. He was re-engaged in his old position but on a lower salary through an agency from 15 January.

Mr Plewes claimed his dismissal was discriminatory but his employer argued that it had complied with the statutory retirement procedure and had genuinely believed it was therefore able to dismiss him lawfully in accordance with the provisions of his employment contract which stated his retirement date was the day before his 65th birthday.

The tribunal held the employer was mistaken and could not rely on the default retirement exemption in the legislation as this only applies to dismissal on or over the age of 65. Mr Plewes’ dismissal on the day before his 65th birthday was therefore discriminatory on the grounds of age. The employer conceded that it was not able to justify that age discrimination.

Furthermore as the employer had failed to follow the statutory dismissal procedure as a result of its misunderstanding the tribunal awarded the maximum 50% uplift to the compensatory award.

Employers should check that the retirement provisions in their contracts provide for retirement at age 65 and not before (unless this can be objectively justified which will be unlikely for most organisations). In some organisations it has been common practice to retire employees on the day before their 65th birthday so that they can start drawing their pension from the day of their birthday. However, as this case demonstrates such practice will now be discriminatory.

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Rebecca McGuirk

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