The Government has confirmed earlier announcements that the Default Retirement Age (DRA) will be abolished in order to give people greater flexibility as to when they stop working.
Currently, the DRA allows employers to make staff retire at 65, without the employee having the right to bring a claim for unfair dismissal. The DRA will be phased out between 6 April and 1 October 2011. From 6 April 2011, employers will not be able to issue any notifications for compulsory retirement using the DRA procedure. Between 6 April and 1 October, only people who were notified before 6 April and whose retirement date is before 1 October can be compulsorily retired using the DRA. After 1 October, employers will no longer be able to use the DRA to compulsorily retire employees.
The Advisory, Conciliation and Arbitration Service (ACAS) has published a useful flowchart outlining the transitional arrangements. This can be found here.
There had been concern that removal of the DRA could lead to increased costs and uncertainty for businesses by effectively removing the cut-off point beyond which group risk insured benefits are currently no longer offered. However, the Government is introducing an exception to the principle of equal treatment on the grounds of age so that there are no unintended consequences for employers that currently voluntarily offer benefits such as income protection, life assurance and medical cover. Otherwise it was feared that employers would cease to offer insured benefits because of the removal of the DRA.
After the DRA has been abolished, it will still be possible to maintain a compulsory retirement age where doing so can be objectively justified. Examples could include air traffic controllers and police officers.
This move will have far reaching implications for the way many businesses operate and employers who fail to act on the changes are at risk of claims of age discrimination and unfair dismissal. We can advise you on the practical issues involved as well as on succession and workforce planning, performance management and ensuring that your policies and practices comply with the law.