Default Retirement Age – what you should know

Transitional arrangements for the removal of the Default Retirement Age begin on 6 April 2011 and employers need to begin preparations now to ensure this happens smoothly.  Here are some important things to consider, because it is expected that Employment Tribunal claims will be frequent as a result of the changes.

The expected timetable for the process begins with the close of the consultation process on 21 October and the Government response in November.  Final legislation is expected early 2011, along with a code of practice or guidance.

Retirements that are notified to employees before 6 April 2011 to happen on or after 1 October 2011 will have to be justified to avoid claims of age discrimination.

From 6 April 2011 no new notifications of retirement under the statutory procedure can be issued

After 30 September 2011 employers will have to provide objective justification for compulsorily retiring employees.  This is likely to affect those who have a retirement age of 65 and wish to retire employees who have their 65th birthday on or after 1 October 2011.

As no statutory retirement notifications can be issued after 5 April 2011, 5 January 2012 is the last date on which an employee might request to continue working beyond retirement age under the statutory retirement procedure.

5 April 2012 is the last possible date on which an employee might retire under the statutory retirement procedure. After this date an employer that wishes to retire an employee will have to follow a fair procedure under the ordinary unfair dismissal rules and rely on one of the potentially fair reasons for dismissal

Employers will still be able to operate a compulsory retirement age, provided that they can objectively justify it and be able to show that it is a proportionate means of achieving a legitimate aim.  Such an aim may relate to economic factors such as the needs of and the efficiency of running a business, the health, welfare and safety of the individual (including protection of young people or older workers), or the particular training requirements of the job.

To be considered proportionate what the employer is doing must be shown to achieve its legitimate aim, the discriminatory effect should be significantly outweighed by the importance and benefits of the legitimate aim, and the employer should have no reasonable alternative to the action that it is taking.

Once the statutory retirement procedure is scrapped, an employer that wishes to retire an employee will have to be able to show that it has a fair reason for dismissal under the ordinary unfair dismissal rules, and rely on one of the potentially fair reasons for dismissal set out in s.98 of the Employment Rights Act 1996 (capability, conduct, redundancy, illegality or some other substantial reason).

The Government is also exploring the possibility of further guidance or a more formal code of practice on handling retirement.

If you need further clarification of any of these issues, please contact Hardwick HR.