One of our Directors asked a 63 year old manager if he would be open to an early retirement option. The Manager said that he was thinking of working up to his 66th birthday when he will get his state pension. Our Director then said “that’s a shame because your role is not in next year’s budget”. Are we in difficulty?

Peter replies:

Yes you are in respect of age discrimination and unfair dismissal.

It is potentially discriminatory to assume older employees are planning on retirement, and there is no longer any real mechanism for having retirement discussions. ACAS advise that this can be done if everyone is being asked about their future intentions. Most times that employers stray too far in this respect the issue can be quickly and amicably resolved, because there is no real detriment. In this case, your employee knows that the decision has already been made, so this is much more than a gentle exploratory chat. There is scope for not just compensation for injury to feelings, but potentially substantial amounts of loss of earnings, assuming that he cannot find similar employment.

This is no way to approach a dismissal on the grounds of redundancy. It is possible that there is a legitimate business need to do without this person’s job, which might be a genuine redundancy.

At the moment it looks like this Manager is in a pool of one, which even if it is a genuine redundancy, is open to two legal challenges:

  1. The pool should be broader (than one).
  2. The Manger should be allowed to ‘bump’ i.e. displace someone more junior and keep a job that way.

You are either going to have to back off completely (and sort out the budget) or plough on, having made sure that you have a very good termination package to offer him, which is likely to involve a substantial lump sum, and a generous enhancement to his pension i.e. an offer he cannot refuse. You should get somebody who knows what they are doing to handle such a difficult negotiation, to achieve an safe and fair settlement agreement.

The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for specific advice.