GOVERNMENT CONFIRMS ABOLITION OF DEFAULT RETIREMENT AGE

The Government has confirmed that it is to go ahead with its plans to phase out the default retirement age of 65, beginning on 6th April 2011 with a view to complete abolition on 1st October 2011. Regulations will be published during the next two months.

The main concerns expressed by employers during the consultation process have been largely ignored and the Government's view is that the dismissal of older workers should be managed either by discussion or performance management.

What this means in practice is that only employees who are notified before 6th April 2011 and whose retirement date is before 1st October 2011 can be compelled to retire applying the default retirement age. After 30th September 2011 only a compulsory retirement policy which can be objectively justified may be used to retire employees at a stated retirement age and the default retirement age will not be available as a fallback position.

The last day employees can therefore be compulsorily retired using the default retirement age is 30th September 2011 and this means that the last day to provide the six months' notice currently required by statute is 30th March 2011. There is a small window between 30th March 2011 and 5th April 2011 when the default retirement age can still be used but if an employer wants to rely on this, the short notice provisions under which an employee may still claim compensation up to a maximum of eight weeks' pay will apply, but those short notice provisions will not be available after 5th April 2011. 

Although the default retirement age is to be abolished this does not necessarily mean that employers may not rely upon a normal retirement age of 65. However, employers will not be able to force an employee to retire at a specified age unless that age can be objectively justified as "a proportionate means of achieving a legitimate aim". Depending on the circumstances, this may include workplace/succession planning, but it is the situation at the retirement date in any case which will be relevant. If they have not already done so, employers should review their retirement age and policies and establish clear (non discriminatory) structures within which to address performance and planning, and be prepared to justify the application of a specified retirement age if required.

STOP PRESS - for a summary of the draft Regulations repealing the default retirement age... more >>

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