The Government intends to abolish, by 1 October 2011, the Default Retirement Age (DRA) of 65 contained in the Employment Equality (Age) Regulations 2006 and has published a consultation document on how this is to be achieved.
Under the proposals, there will be a six-month transition period beginning on 6 April 2011. From this date, employers will not be able to issue any notification for compulsory retirement using the DRA procedure. Between 6 April and 1 October, only employees who were notified before 6 April and whose retirement date falls before 1 October can be compulsorily retired using the DRA.
From 1 October 2011, the DRA will be abolished and the consultation proposes relieving employers of the administrative burden of the associated statutory retirement procedures. From that date, individual employers will only be able to operate a compulsory retirement age if this can be objectively justified as a ‘proportionate means of achieving a legitimate aim’. As the consultation points out, it is not easy to demonstrate that a retirement age is objectively justified, so employers should make sure that the age chosen can be objectively justified before deciding to use a compulsroy retirement age. An employee will still have the right to request to work beyond the compulsory retirement age where one is in operation. Where an employer chooses to impose a retirement age and this cannot be objectively justified, it could face claims of age discrimination and/or unfair dismissal.
The consultation, Phasing out the Default Retirement Age, can be found at http://www.bis.gov.uk/assets/biscore/employment-matters/docs/p/10-1047-default-retirement-age-consultation.pdf. The consultation closes on 21 October 2010.
The Government’s proposals will impact on many employment rights, such as pension schemes and age-related benefits and this consultation specifically seeks views on the consequences of removing the DRA with regard to insured benefits and employee share plans.
This is a radical change in employment law and we would advise you to consider its implications for your business without delay.