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Statutory Obligations Must be Carried Out in Good Faith

23 December 2011

A case concerning an employer’s duty to consider a request from an employee who wished to work beyond the statutory retirement age of 65 that was in force at the time (Ayodele v Compass Group plc) illustrates that employers must perform any statutory obligation genuinely and in good faith.

When his employment was terminated, in January 2008, Mr Ayodele brought claims of unfair dismissal and age discrimination after Compass Group plc refused his request to work beyond the normal retirement age. The company had a blanket policy of retiring its employees when they reached the age of 65.

The Employment Tribunal (ET) upheld Mr Ayodele’s claim of unfair dismissal because Compass Group had not given genuine consideration to his request to work beyond retirement age, as was required under the Employment Equality (Age) Regulations 2006, and awarded him £15,981 in compensation.

Compass Group appealed and lost. The Employment Appeal Tribunal (EAT) confirmed that a policy of not agreeing to requests to work beyond retirement age was, in principle, legitimate at that time, provided that it was a policy, rather than an inflexible rule, and it allowed for the possibility of exceptions.
However, the EAT upheld the ET’s finding as, according to the evidence of the managers who had conducted meetings with Mr Ayodele to discuss his request to work beyond the statutory retirement age, they had acted on the basis that the company’s retirement policy had to be enforced without exception. The meetings were mere formalities as there was nothing Mr Ayodele could say or do to alter the outcome. The procedure was therefore a ‘sham’. Even though the Regulations do not contain the express words ‘in good faith’, that does not mean that a sham or fraudulent process is permissible. It is implicit that any statutory obligation must be performed in good faith and the duty to consider means what the words convey.

The Employment Equality (Age) Regulations have now been repealed and the default retirement age abolished. It is, therefore, no longer possible to require the compulsory retirement of employees at age 65. The last date on which employers could issue a default retirement notice was 5 April 2011. If an employee who was given notification of retirement prior to 6 April 2011 requests an extension of their period of notice of retirement, the employer can agree to this and still rely on the default retirement age provisions to enforce the retirement, providing that the extension is no more than six months and the employee retires on or before 5 October 2012. The employee’s right to request to continue working beyond retirement age ceases on 5 January 2012.

Employers should beware of performing any statutory duty of this nature with a closed mind, only paying lip service to the obligation with no genuine intention ever to deviate from a rigid rule.

The abolition of the default retirement age can raise serious issues for employers. We can advise you on its implications for your business.

For more information on this subject or any other legal matter,
please contact us:

Tonbridge: 01732 770660
Sevenoaks: 01732 747900
Email: [email protected]