Archived decisions

Hampshire Fire and Rescue Authority

Human Resources Committee Item

20th January 2010

Compulsory Retirement Policy

Report of the Chief Officer

Contact: Keely Stafford, HR Business Manager, Tel: 023 8064 4000 ext 5425

E-mail: [email protected]

1

Summary

1.1

Hampshire Fire and Rescue Service's (HFRS) Senior Management Team (SMT) made a policy decision in December 2006, which was endorsed by Hampshire Fire and Rescue Authority (HFRA) Human Resources (HR) Committee, that HFRS would adopt a `normal retirement age' of 65 for all employees. The policy decision was made in accordance with the Employment Equality (Age) Regulations 2006, which came into force on 1 October 2006.

1.2

The exception to compulsory retirement at the age of 65 was where there was a case to support a critical business need, and where particular skills or knowledge cannot be obtained from the existing workforce. The individual concerned also had to wish to continue working beyond the age of 65.

1.3

The policy decision has been reviewed on an annual basis since it was made in 2006. This paper outlines the details that formed the basis of this review that lead to decision being made by SMT to alter the position previously adopted by the Service. This took into consideration the organisation's demographics and emerging employment law.

1.4

In 2008, a recommendation was made to SMT that the organisation should no longer require employees to automatically retire on reaching the age of 65. However, at that time SMT were not minded to alter the current policy for compulsory retirement and their decision was recorded as follows (SMT Minutes September 2008):

"The report submitted to SMT referred to a challenge to the Government's Age Regulations which came into force on 1 October. The challenge by Heyday, a partner of Age Concern, asserts that a `forced' retirement age at 65 is discriminatory. SMT were advised that over 260 cases are being held in abeyance until the final outcome of the Heyday challenge is considered by the High Court in mid 2009.

SMT considered the impact of discrimination on the basis of age against the adverse effect of creating a diverse workforce if the Service were to remove the current retirement age of 65. It was therefore agreed that the current requirement to submit a case to retain an employee beyond the age of 65 would remain until the outcome of the Heyday challenge becomes known".

2

RecommendationError! Bookmark not defined.

That the HR Committee endorses the Service's decision to remove the compulsory retirement age of 65 for all employees with effect from 31 March 2010.

3

Background

3.1

The Age Regulations have impacted upon every area of the employment relationship, including recruitment, terms and conditions and dismissal. Since the introduction of the Regulations, their implications have been considered by the HR Directorate to ensure that the Service's policies and procedures are compliant.

3.2

More specifically, the Regulations introduced retirement as an additional fair reason for dismissal on or after 1 October 2006. Since this date, an employee dismissed at or above age 65, where the reason for dismissal is retirement, has not been able to claim that they have been discriminated against on the grounds of age or claim unfair dismissal, provided that the appropriate procedure for terminating the contract of employment was followed and retirement is the sole reason for dismissal.

3.3

At the time of introducing the Regulations, the Government set a national default retirement age of 65, which it intended to review in 2011 but this review has now been brought forward to 2010. The Government maintains that for reasons of social and workforce planning, retirement at age 65 is automatically justified. However, the legality of the Government's position was challenged by `Heyday', a partner of `Age Concern', who asserted that `forced' retirement at age 65 is discriminatory. Heyday brought proceedings for the judicial review of the Employment Equality (Age) Regulations 2006 and the case was heard by the High Court recently.

3.4

The Default Retirement Age (DRA) was held by the High Court to be lawful. The Judge considered there is a distinction between having a discretionary age (i.e. the DRA) for retirement, which permits employers to continue employment of individuals beyond this age, and having a mandatory retirement age where both employees and employers have no discretion or flexibility. However, the Judge also stated that he was of the opinion that 65 could not remain as a DRA after the review of the DRA, due to be undertaken by the Government in 2010. Other commentary on this matter also suggests that the DRA will be raised or removed completely.

4

Analysis of Data

4.1.1

4.1.2

4.1.3

Since the compulsory retirement policy decision was made in December 2006, 20 employees (25 contracts) have reached the age of 65 and HFRS has required that they retire from work, either because they had already reached the age of 65 at the time the decision was made, or have reached the age of 65 since. Of these 20 individuals, 6 are female.

Strong challenge from UNISON was received in two of these cases, both of which involved female employees. The employees concerned expressed their objections to the Service's policy for compulsory retirement, and demonstrated how the decision had adversely impacted upon them, their families and their employment relationship with HFRS. In both cases, appeals against the decision of compulsory retirement were not upheld.

However, of the 25 contracts in which the post holder has reached the age of 65 since the policy was implemented, 9 have had their employment extended in accordance with our policy.

4.2

Over the next 3 years, a further 19 current employees will reach the age of 65. Of the 19 individuals, 3 are female.

5

Implications for the Pension Schemes

5.1

The Firefighters' Pension Scheme (FPS) was amended in November 2005 to remove the compulsory retirement age of 55. Since then, employees have been entitled to automatically continue working beyond the age of 55, provided they are fit to do so. HFRS has in place a system of conducting three yearly health screening for operational employees, increasing to two yearly after the age of 52, to ensure that they are fit for role. In light of this change to the FPS, there is no legal basis for compulsory retirements at age 55 for operational employees to continue.

5.2

Under the New Firefighters Pension Scheme (NFPS), normal retirement age is 60. However, members of this scheme can choose to retire before this at age 55 or over with immediate payment of benefits but the benefits would be subject to an actuarial reduction at 5% for each year between the date of retirement and age 65 (deferred pension age).

5.3

The normal retirement age for employees in the Local Government Pension Scheme (LGPS) has been age 65 for some time.

6

Requests to extend service beyond normal retirement age

6.1

Under the Regulations, employees have a right to request to continue working beyond the normal retirement age of 65.

6.2

HFRS allows an extension to normal retirement age where there is a case to support a critical business need, i.e. where particular skills or knowledge cannot reasonably be obtained from the existing workforce. This is only the case if the individual concerned wishes to continue working beyond the age of 65 and is usually only for a period of up to 12 months. If the Service and the employee wishes to continue the arrangement beyond the permitted extension, they must submit a further request.

6.3.1

6.3.2

As part of the review of the Service's compulsory retirement policy, a People Impact Assessment (PIA) has been completed.

The PIA indicates potential for a general policy agreeing to all requests to extend service beyond age 65 could be a barrier to the Service in its aim to increase the diversity of the workforce, and in particular would have an adverse impact on women, people from a minority ethnic background and a younger workforce.

6.4

However, evidence suggests that extensions of an employee's service beyond age 65 offers advantages to HFRS where there is a critical business need to retain the skills, knowledge and experience of an employee. This will have a positive impact upon the Services ability to attract an older employee group which also forms part of our diversity strategy.

7

Contribution to Corporate Aims and Objectives

The compulsory retirement policy decision is an important part of HFRS' employee terms and conditions of employment and contributes to managing our resources, particularly in terms of recruiting and retaining employees with critical business skills and/or knowledge.

8

Resource Implications

8.1

The retention of existing employees beyond the age of 65 will have a positive impact upon recruitment and selection costs of filling a vacancy.

8.2

Administration of the current policy will be significantly reduced if the recommendation in this paper is accepted. There will no longer be a need for individuals to be written to informing them that they are to retire on reaching the age of 65, business cases to be completed by line managers, contract extensions to be administered where these are agreed, and appeals to be heard and answered where these are lodged.

8.3

Rates of pay and leave entitlements are likely to be more enhanced for employees who wish to continue to work beyond the age of 65, assuming they have been employed by the Service for a length of time sufficient to attract enhanced benefits.

8.4

Line managers will need to ensure performance management is in place for individuals throughout their employment with HFRS. This includes ensuring that an individual is fit for their role and their wellbeing at work is continually considered. Normal performance management arrangements would apply.

9

Consultation

Formal consultation was carried out with all the Trade Unions recognised by HFRS at the time the policy decision was made. The FBU and RFU confirmed they were content with the recommendations at that time. UNISON, FOA and GMB chose not to submit any comments. This proposal does not alter or worsen the terms and conditions for any employee groups in respect of their employment rights, therefore, further consultation has not been sought.

10

Conclusion

The decision to remove the retirement age is an important one which sends clear signals to the staff within the organisation that they will continue to be valued for what they are able to contribute to the service. We will be more readily able to retain the skills, knowledge and experience of those staff who wish to stay, whilst still enabling others to leave at the normal retirement age of 65 to do so. We will be able to demonstrate to the wider community our commitment to diversity. A number of high profile organisations have already done the same thing and have found it to have made a positive impact on their business.