Default Retirement Age
18th February, 2011
It has been on the cards for a long time, so the Government’s announcement that the Default Retirement Age (DRA) will be abolished from 1 October 2011 has come as no surprise.
At the moment, the DRA is 65, which means that employers are able to dismiss an employee on the grounds of retirement at the age 65 or over assuming that they follow the strict retirement process. The Equality Act 2010 also confirms that this form of compulsory retirement does not constitute age discrimination. The statutory procedure requires that employers provide six months notice to the employee, to request to defer their retirement. Although this request must be considered, there is currently no obligation to accept such requests.
People are living longer and this is resulting in an older workforce. As such, the Government has decided that from 1 October 2011 that to retire an employee solely because they have reached a certain age without an objective justification could amount to unfair dismissal and age discrimination, the latter providing for uncapped compensation.
An employer will still be able to retire an employee without justification as long as the retirement takes place before 1 October 2011. Given the requirement to provide the affected employee with six months notice, the last date this notice can be given is 30 March 2011. At the moment, these transitional provisions will only apply where the employee in question turns 65 between 5 April 2011 and before 1 October 2011. It may be that these provisions will be amended over the coming weeks to include those employees who turn 65 before 5 April 2011.
For employers who wish to force an employee to retire after this date, all hope is not lost. An employer will still be able to operate a compulsory retirement process, but they will need to be able to objectively justify compulsory retirement at a particular age. This will mean that they must have a legitimate aim or aims in a relation to the employees to whom it applies, that having a ‘normal retirement age’ meets that aim and that it is proportionate to use a normal retirement age as means of meeting that aim. Evidence must be available to demonstrate, if challenged, that these three criteria have been met.
A ‘legitimate aim’ may include e.g. health and safety, workforce planning and the physical requirements of the job.
Employers will now need to consider whether or not they wish to retain a normal retirement age. If they do, they need to be aware that although not impossible, ensuring that such retirements are lawful is going to become a much more onerous task.
If you would like more information on how the abolition of the Default Retirement Age will affect your business, or an updated retirement policy that reflects the change in legislation, please do not hesitate to contact a member of the team.
For more information on this, or any other Employment Law matter, please contact Helen Watson on 01244 405565 or email her here.