In New Zealand employment law, there is no official age for retirement. The most common age for retirement is 65, as this is the superannuation qualification age. The retirement process is generally the same as for resignation. When an employee decides to leave the company because of age, it’s crucial for employers to ensure that the worker does not feel the retirement has been forced.
Planning
Retirement is a natural end to employment and, in a similar method to resignation, should be managed to minimise disruption to your business and to promote a positive environment in the workplace.
One of the most mutually beneficial ways of managing retirement is to encourage a phased retirement. This ultimately encourages the employee, or employees, to think about their retirement planning and how they can ensure they leave the business with minimal disruption. Your efforts to support this can only be viewed as a positive by employees.
Importantly, when the time does come for an employee to retire their final pay should be calculated and the correct process as outlined in any workplace policy should be followed.
Discrimination
Discrimination based on age can be an issue raised if an employee feels they were forced to retire, however if carefully managed there are some exceptions to the rule of forcing an employee to retire.
If your workplace has employees covered by an employment agreement which was created before 1 April 1992, this agreement may have an age of retirement specified. This was a lawful provision in employment agreements, however both you and your employee must have agreed to this in writing on or before 1 April 1992 for this to still be effective.
There are some other exceptions to this rule, only encountered in certain situations.
Exceptions to the retirement age rule
Generally, an employer cannot make an employee retire, which could constitute age discrimination. However, there are some exceptions to this rule:
Employment agreement before 1 April 1992
Some employment agreements written before 1 April 1992 were allowed to specify a retirement age. The employer and employee must have agreed in writing to confirm this retirement age.
Other exceptions
Occupations in which the retirement age is set out in legislation, such as coroners and judges.
Where being a particular age or in a particular age group is a genuine occupational qualification for the employment. For example, some industries using heavy machinery will set a maximum age for a role at 60 years old. If an employer wishes to rely on this exception, they should establish a policy to this effect and include it in the employment agreement.
Certain occupations including:
Non-New Zealand crews of ships and aircrafts
Domestic employment in a private household
These exceptions won’t apply if the employer can make changes (that don’t involve unreasonable disruption) so another employee can perform the duties impacted by the exception.
Forced retirement outside of exceptions
If an employer does force an employee to retire, and the situation is not covered by one of the exceptions, then the employee can challenge the forced retirement by raising a personal grievance.
Personal grievance claims concerning forced retirement are investigated by the Employment Relations Authority. If a business is found to have retired an employee unlawfully, the penalties can be expensive. To avoid any personal grievance claims, take all the necessary precautions to ensure your employees do not feel they are being forced to retire.
For support with managing employment relations, contact Employsure’s FREE 24/7 Advice Line on 0800 568 012.
