Employment & Immigration Legal Updates 28/09/2009

Default retirement age is lawful

The High Court has finally ruled in the 'Heyday' case that the UK default retirement age of 65 is lawful under the provisions of the European Equal Treatment Directive (2000/78/EC).

Professional support lawyer Elizabeth Stevens comments:

The case was brought by a campaigning group backed by Age Concern (now Age UK) to challenge the legality of the UK Government's implementation of the age discrimination regulations in 2006. In particular, it challenged the default retirement age of 65, at which age employers can require employees to retire without having to justify their decision, provided they follow the correct process and consider any application by the employee to continue working beyond 65.

In March 2009, the European Court of Justice handed down its decision in the case, ruling that the Directive does permit a compulsory retirement age but that it was for the national courts to determine whether the age of 65 could be justified (see our previous briefing).

In considering his decision, Mr Justice Blake reviewed the situation and the factors taken into account by the Government at the time the Age Regulations were introduced in 2006, rather than any subsequent social or economic developments. On this basis, he was satisfied that the default retirement age was implemented in order to fulfil legitimate social policy objectives concerning the labour market and was proportionate at that time in view of the discretion afforded to member states in how the Directive was implemented. The default retirement age of 65 is therefore lawful, for now.

Comment

The judgment includes a number of comments that are highly critical of the fact that 65 was selected as the default retirement age. Mr Justice Blake considered there were 'powerful reasons' why an age over 65 should have been adopted by the Government. He is of the view that 68 (by way of example) would not have undermined or diminished any of the Government's objectives in adopting a default retirement. The judge also comments on the recently announced review of the retirement age, suggesting that if such a review had not been imminent he would not have considered the age of 65 to be proportionate. This aspect of the decision is somewhat contradictory, as it clearly states that it is considering the issue of proportionality at the date the Regulations were enacted in 2006.

It has been reported that in light of the forthcoming review, the High Court's decision will not be appealed. All the employment tribunal claims concerning compulsory retirement at 65 that are currently pending (some 260) are now likely to be dismissed following this decision.

Looking forward, in view of the Judge's comments it seems very likely that the default retirement age will be increased at least to 68, possibly 70. In the meantime, whilst employers can continue to rely on the existing retirement age for now, they should ensure the correct procedure is followed in relation to the retirement of all employees.

Postponing holiday due to sickness

The ECJ has handed down an important decision concerning the right of workers to postpone annual leave when they fall ill at a time they were due to be on holiday.

Employment Principal Oliver Brabbins comments:

This case concerned a Spanish worker who was absent on sick leave (due to an accident at work) prior to a period of pre-arranged holiday. He requested that his period of holiday be rearranged for a later date, but this request was refused by his employers. The worker challenged this decision and the Spanish court referred the case to the European Court of Justice (ECJ).

The Court has now decided that workers who fall sick during a period of annual leave under the provisions of the Working Time Directive should be allowed to reschedule that leave at a later date. Under the Directive, a worker must be permitted the opportunity to take his statutory annual leave entitlement and so if the leave cannot be taken in the current holiday year, he should be allowed to carry the leave over into the following holiday year. The Court's ruling will apply regardless of whether the worker fell ill before the scheduled period of holiday, or whether he fell ill whilst on holiday.

Comment

This decision poses many practical difficulties for employers. It follows hot on the heels of the decision in the case of Stringer and others v HM Revenue & Customs, in which the ECJ ruled that workers continued to accrue and could opt to take statutory holiday during a period of sick leave. This latest decision effectively means that workers who are sick have a choice whether they designate a period of their sick leave as holiday (likely to be attractive to those on long term sick leave), or postpone a period of holiday and take sick leave instead (potentially more attractive to those taking a short period of sick leave). Much will depend on the employer's sick pay arrangements as to which option an individual worker selects.

What is not clear from the decision is what evidence an employer can require of an individual's illness. If the worker is off sick before he is due to go on holiday, it is more likely he will be able to obtain a doctor's certificate, but if he falls ill whilst on holiday abroad there may be no evidence available. It is likely that employers will need to revisit their sickness absence policies in order to clarify reporting requirements for employees who are on holiday at the time they fall sick.

It is possible that the Working Time Regulations will need to be amended in light of this decision to allow for the carry forward of holiday in these circumstances. At present, the Regulations only permit the carry forward of up to eight days annual leave (the additional 1.6 weeks of leave applicable since 1 April 2009).

Click here for a copy of the ECJ decision

A reminder: October changes

Changes to the national minimum wage rules and rates are due to take place on 1 October, as well as the increase to statutory redundancy pay announced in the budget earlier this year.

Employment solicitor Tina Maxey comments:

The annual increase to the national minimum wage rates will take place on 1 October 2009. The standard (adult) rate increases from £5.73 to £5.80. See our previous briefing for further details.

In addition, new rules relating to the use of tips and gratuities will come into force on the same day, meaning that they can no longer be used to count towards the national minimum wage. See here for further information.

Finally, the rate of a week's pay for the purpose of calculating statutory redundancy pay (as well as some employment tribunal awards) will increase from £350 to £380, meaning the maximum amount of statutory redundancy pay will be £11,400 for those with the requisite period of service. This will apply in relation to dismissals taking effect on or after 1 October 2009. See here for details.

Additional Paternity Leave

The Government has announced a new consultation on proposals for transferring part of a woman's maternity leave to the baby's father.

Employment solicitor Sanjeev Uppal comments:

The Government will shortly be consulting on draft regulations to implement its plans for fathers to be able to take up to six months' paternity leave, once the mother has returned to work.

The new right to 'additional paternity leave' will be in addition to the existing right to take two weeks' paid leave at the time of the child's birth. It is intended the right will take effect in relation to babies born on or after 3 April 2011. The father will be entitled to take up to three months of leave paid at the same rate as SMP (currently £123.06), and three months of unpaid leave. The total amount of leave available for parents to share will remain at 12 months, with 39 weeks in total being paid as it is presently. Plans to extend paid leave to 12 months have been put on hold indefinitely.

The intention is to give families more choice and flexibility in how they balance work and childcare, and to enable fathers to play a bigger part in bringing up their children. Estimated take up of this new right is low, however, at less than 6 per cent.

These articles copyright © 2009 Steeles Law llp. All rights reserved.