Is My Employee Too Old to Work?

October, 2014

By Clayton Payne

Some employers may ask, is there a general retirement age and can I terminate someone’s employment on this basis?

A recent decision of the Federal Circuit Court (FCC) re-affirms that in Australia, there is no law generally which mandates retirement at a certain age, and in fact, any attempt to terminate employment on this basis can be met with substantial penalties.

[NB. Obviously there are some occupations where age based retirement is compulsory and legal, such as the judiciary and the defence force, however, these are exceptions to the rule].

The FCC found in Fair Work Ombudsman v Theravanish Investments Pty. Limited and Others, that the Applicant had been subjected to adverse action on account of his age. The Respondents (comprising the corporate entity employer and its two directors) were ordered to pay, all up, close to $40,000 in compensation and penalties. The Respondents’ business was a Thai restaurant which employed up to 130 staff at one point.

Evidence was given that the Applicant made enquiries about his entitlement to long service leave, and at this juncture was asked by one of the Respondent directors, as to when he was going to retire.

The Applicant eventually took long service leave, but before returning to work, was told by one of the Respondent directors that he would now be working part-time. The Applicant was later informed that he was not rostered for work on the week following his return from leave. The Applicant wrote to the first Respondent raising concerns about not being rostered for work, having his employment status changed, and raising issues about underpayments. One of the Respondent directors then wrote to the Applicant, advising him that his employment would cease approximately three weeks later because of his age, noting that he would soon turn 65.

It also came to light that that the Respondents’ accountant had given them employment advice. This advice included an assertion that the Fair Work Act provided a retirement age of 65. Judge Burnett of the FCC found that such advice was “patently incorrect”, noted that the accountant had no relevant qualifications to give this advice, and that the Respondent directors did not take any steps to ascertain if the accountant had any such relevant qualifications.

It was accepted that the Respondents were responsible for a number of contraventions of the Fair Work Act, particularly with respect to discrimination and record keeping.

Conclusion

This case serves as a timely reminder to employers to obtain appropriate advice in relation to employment matters, and to ensure that they maintain employee records as required by the relevant legislation.

In addition, if an employee is older, but is physically incapable of carrying out the inherent or genuine occupational requirements of a position, then it is possible to legally terminate that person’s employment. Appropriate advice should be sought in these circumstances however, and care should be taken to ensure that the decision is not taken merely on the basis of a perception that the employee is “too old” for the position.

The decision also highlights that care needs to be taken by employers in obtaining the correct advice when considering a termination of employment.

Contact Mills Oakley

For more information, please contact:

Ross Levin | Partner
Melbourne
T: +61 3 9605 0070
E: rlevin@millsoakley.com.au

Malcolm Davis | Partner
Sydney
T: +61 2 8035 7932
E: mdavis@millsoakley.com.au

Adam Lunn | Partner
Melbourne
T: +61 3 9605 0868
E: alunn@millsoakley.com.au

Lisa Anaf | Partner
Melbourne
T: +61 3 9605 0857
E: lanaf@millsoakley.com.au

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