Under the “duty to consider” procedure, if an employer wishes to retire an employee, it needs to notify the employee at least 6 months before the intended retirement date (but no more than 12 months in advance) (paragraph 2(1), Schedule 6 to the Age Regulations). If the employer misses that first date, it still has an ongoing duty to notify the employee up to a deadline 14 days before the intended retirement date (paragraph 4, Schedule 6).
It is only a continued failure to notify the employee by the 14-day deadline which will render the dismissal automatically unfair. Where the employer gives a notification before the 14-day deadline, but later than the 6 month deadline, the employer may still be able to establish a fair retirement dismissal. However, the employer may be required to pay compensation for failure to comply with the notification duty, of up to 8 weeks’ pay, capped at the statutory maximum (currently £350 per week) (paragraph 11(3), Schedule 6).
Mrs Todd worked at a nursing home run by Sanquhar Home Ltd as an administrator. On 2 August 2007, she was given a notification that her employment would terminate by reason of retirement on 25 October 2007, and she was notified of her right to request to stay on. The notification was given only 12 weeks before the intended retirement date. Mrs Todd exercised her right to request to stay on, and her request was granted. She continued in employment beyond the retirement date originally notified to her.
Mrs Todd brought a claim in the employment tribunal alleging breach of the notification provisions. Sanquhar admitted that it had not fully complied with its notification duty, so the issue the tribunal had to consider was the compensation it would be “just and equitable” to award.
Sanquhar argued that there should be no compensation, as Mrs Todd had received a notification about her retirement and had not been deprived of any notice money, as she had in fact continued in employment. Mrs Todd argued that the starting point for compensation should be the maximum 8 weeks’ pay, in line with case law relating to protective awards for failure to consult on collective redundancies.
The employment tribunal held that the compensation provisions under the duty to consider procedure were distinct from protective awards in collective redundancy situations and for failure to consult under the similar TUPE provisions, where the tribunal had to have “regard to the seriousness of the employer’s default”. Under the duty to consider procedure, the compensation payable was an amount which was “just and equitable in all the circumstances”.
The tribunal did not agree with Sanquhar that no compensation should be paid at all. However, the tribunal took into account the fact that the failure by Sanquhar was only in the timing of the notification and that Mrs Todd had in fact been able to remain in employment and had no loss of salary. It therefore decided that the “just and equitable” amount of compensation in this case was one week’s pay (capped at £310 at the time of Mrs Todd’s complaint).
Given that Mrs Sanquhar did not really suffer any disadvantage from the late notification, it is unsurprising that the tribunal felt it should only award a small compensation payment. The position is likely to be different where a failure to notify in time causes the employee to suffer financial loss, particularly if s/he is actually retired under the process.
However, the maximum compensation payment is 8 weeks’ capped pay (so £2,400 at the current rate of £350 per week). Employees who are dismissed in such circumstances are therefore likely to attempt to increase their potential compensation by also claiming that the dismissal was not in fact a “retirement” and was unfair and discriminatory.