Turn Up Your Hearing Aid - I said "You're Fired"!
In the not-too-distant past we lived in an employment environment where compulsory retirement was a common concept. Many employment arrangements contained a provision requiring an employee to retire either at age 60 or 65 or, alternatively, providing the employer with a discretion to terminate employment after an employee turned 65 years of age.
A significant change occurred to that aspect of our employment culture with the introduction of the Human Rights Act 1993. It may be, however, that many employers are either unaware of this change, or do not appreciate its effect.
The Employment Court was recently called upon to consider issues concerning compulsory retirement in Fogelberg v Association of University Staff of New Zealand Inc. The case concerned an application brought by the vice-chancellor of the University of Otago for a declaratory judgment concerning compulsory retirement clauses contained in the University's employment contracts.
Prior to 1 April 1992 staff at the University had been employed under employment contracts providing for compulsory retirement following an employee's 65th birthday. Many staff who had been employed at that time continued in the University's employment - although their employment contracts had been replaced since 1992.
Significantly, the University accepted that unless a statutory exception applied, the compulsory retirement clauses contained in the contracts were unlawful in terms of section 22 of the Human Rights Act - which prevents discrimination in employment on the grounds of age.
The University sought to rely upon section 149 of the Act, which allows retirement clauses contained in pre-1992 employment contracts to continue in effect provided that both employer and employee have confirmed that continuation. The University argued that its employees had indicated their acceptance of the continued effect of the retirement clauses.
The Court rejected the University's argument. It held that section 149 did not allow the University to carry over the retirement provision into successive contracts without obtaining written confirmation from the employees affected.
This case serves as a valuable reminder to many employers who might have held misconceptions about compulsory retirement in New Zealand. Discrimination on the basis of age is outlawed by the Human Rights Act. The Act only allows limited exceptions in employment situations - for example, where age might be considered to be a genuine occupational qualification, or where issues of safety arise.
Further, employers should be aware that long standing employees who have pre-1992 employment contracts may not have compulsory retirement provisions enforced against them unless there is written confirmation signed by both employer and employee confirming that this is their mutual expectation.
Employers should also be aware that they may not offer incentives to employees to retire if those incentives could be interpreted as an attempt to coerce an employee to retire from employment. Any retirement incentive policy should be formulated with considerable care - and ideally with the benefit of legal advice.