The law on age and retirement is changing. The default retirement age is to be phased out between 6 April 2011 and 1 October 2011 and fixed retirement ages will be unlawful. Forced retirements will no longer be lawful and it will allow people the flexibility to choose when they want to retire.
Currently the Default Retirement Age (DRA) enables employers to force employees to retire at the age of 65 regardless of their personal circumstances and thus allows workers to be retired on age grounds alone. In removing the DRA, the Government believes that people are not deprived and prevented from working purely because they have reached a particular age. From April 2011, employers will no longer be able to use the DRA to maintain a compulsory retirement policy for their workforce at age 65 or above.
This change means that from 6 April 2011, all associated statutory retirement procedures including the duty on employers to give a minimum of 6 months’ notice of retirement will also be removed. However, a transitional period applies for notifications of retirement issued before 6 April 2011 and whose retirement date is before 1 October 2011 can be compulsory retired using the DRA.
Employers will no longer be able to prohibit job applicants from applying for a job if they are aged 65 or over, or are within six months of the age of 65. The reason for this abolition by the Conservative-Liberal coalition government is demographic change and people living longer and healthier lives. Many people want the option to continue to work beyond the age of 65 often feeling they have talent, experience that only comes with age and more to contribute. For example, where a woman has stayed at home to raise a family and then decides to embark on a career later in life. “With more and more people wanting to extend their working lives we should not stop them just because they have reached a particular age” said Employment Relations Minister Edward Davey.
This move has been welcomed by anti-ageism campaigners and trade unions but employers’ groups have expressed concern about the momentum of the change and its potential repercussions. The EEF manufacturers’ organisation has criticised the short timetable being proposed before the Default Retirement Age is phased out from April 2011 which it believes will give manufacturers insufficient time to prepare for such an important change. It also considers that the change could lead to an increase in employment tribunal cases from older employees who believe they have been unfairly forced to leave their job rather than allowed to retire. The Confederation of British Industry (CBI) has argued for the retention of the DRA as part of the legal framework on age discrimination.
How will employers retire employees after the DFA is abolished?
After 1 October 2011, employers will have a choice: they can abolish retirement ages in their organisation completely or they can operate a compulsory retirement age provided they can objectively justify it. It is important to realise that any age set by an employer that cannot be objectively justified will be unlawful age discrimination. To establish objective justification the employer must show that the retirement age set is a ‘proportionate means of achieving a legitimate aim’. Employers must be able to show that they have a strong business reason for the retirement age chosen and be able to back up its argument with strong evidence. Failure to objectively justify a retirement age may result in claims for unfair dismissal and/or age discrimination and employers will no longer be able to rely on the defence that they followed the statutory retirement procedure.