Pensionable Age and Appointment of People past this Age


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The EEA states that an employee may not be unfairly discriminated against because of their age. However, reaching the retirement age is a fair reason for dismissal. This means that the employer must have an agreed retirement age policy in place. In terms of fair discrimination, reaching retirement age is one of those grounds for which an employee’s services may be terminated lawfully.


There are three possible scenarios:

 
  • If you sign an employment contract that stipulates a retirement age, then you can legally be required to retire at that age. The organisation will not be required to give you notice.
  • If there is no mention of a retirement age in your contract and there is no organisational norm, then you can continue to work until you are unable to perform as per the job requirement. Your employer can only terminate your contract in accordance with the labour legislation (that is for misconduct, operational requirements or incapacity) and will have to follow the procedures set out in your contract and labour law. The courts have found that it is unfair discrimination for your employer to terminate your employment services just because of your age in the absence of any other guidelines/indicators, unless it meets one of the above criteria.
  • If the retirement age is not in the contract but is agreed or if there is an organisational norm, then the employer can give you notice requiring you to retire at that age. The notice period will be the same as the notice period for termination of employment set out in your contract of employment. An organisational norm exists where there is a general understanding and consistent practice that the "normal" retirement age is 55, 60 or 65. 

Consideration


The best practice is to always rather have a retirement age stipulated in your employment contract or at least to have a policy that determines the retirement age for all employees. It gives the employer then an opportunity to, should it deem necessary, to provide someone who has reached the retirement age, a fixed term contract for a further period. This is not without risk, but if handled correctly, the risk can be mitigated and the employer has the opportunity to retain skills critical to their success. A succession plan is recommended to ensure continuity within your business.