The age discrimination legislation, which came into force in 2006, permits employers to retire their employees when they reach the age of 65. If they follow the prescribed procedure in retiring someone (see How to handle retirement dismissals [subscription required]), which involves notification of the right to request to continue working beyond the intended retirement date, the legislation provides that the retirement will not amount to unlawful age discrimination or unfair dismissal.

The Government has always been committed to reviewing whether or not the default retirement age continues to be appropriate and necessary, but the date it gave for this review was 2011. Now, in a new document Building a society for all ages (PDF format, 656K) [on the HM Government website], it has announced that the review will be brought forward by a year to 2010. In doing so, it points to the “very different economic circumstances today”, both for individuals and for employers, compared with those three years ago when the legislation came into force.

The Government points to the financial benefits to employees in working longer - they continue to earn for a longer period and receive an increased pension on retirement. It also states that they can continue to provide experience to business and that many employers appreciate their loyalty and maturity. However, the CBI, the business lobby organisation, is unenthusiastic about the earlier than expected review, stating that the announcement is disappointing at a time “when so many businesses are under pressure”. It views the default retirement age - combined with the right to request to continue working beyond retirement age - as necessary in allowing organisations to plan ahead. Who is right? - let us know your views.

Of course, the default retirement age is also under scrutiny at the moment in another forum, with the High Court set to hear the Age Concern and Help the Aged legal challenge to it on 16 July. The case was referred to the European Court of Justice, which said that it could, in principle, be justified by legitimate social policy objectives. The question is whether or not the Government can meet the high standard of proof required to show such justification.

We won’t have the final judgment until the autumn. But, even if the default retirement age is ruled lawful, the Government’s earlier than expected review of the default age signals that it may be on its way out in any event. If it is, no changes would be implemented until 2011.