Outlook video: abolition of the default retirement age
XpertHR's head of content Jo Stubbs and group editor David Shepherd discuss the Government's proposals on retirement, under which, from 6 April 2011, employers will no longer be able to rely on the default retirement age to maintain a compulsory retirement age for their workforce.
Important information
Please note that the information in this video and the accompanying text was based on the Acas guidance on the repeal of the default retirement age produced in January 2011 (as a result of the Government having "worked closely with Acas", according to Phasing out the default retirement age: Government response to consultation (PDF format, 111K) (on the BIS website)).
The Acas guidance previously stated that "the last day that employees can be compulsorily retired under the default retirement age is 30 September, so the last day to provide six months' notice required by the DRA provisions is 30 March 2011" and "employers can still use the DRA between 30 March 2011 and before 6 April 2011 but if they do they must use the short notice provisions". The guidance has now been changed and reflects the content of the draft Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011.
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The questions in full:
The Government plans to abolish the default retirement age. When will this take effect?
Under the Government’s proposals, from 6 April 2011 employers will no longer be able to rely on the default retirement age to maintain a compulsory retirement age for their workforce of 65 or over.
Employers currently have to follow a statutory retirement process including giving between six and 12 months’ notice of the intended retirement and notifying employees that they can request to continue working beyond the intended retirement date – will this process still apply when the default retirement age is removed?
No, the Government intends to remove these associated retirement procedures along with the default retirement age. As employers will be aware, at present, if they follow the required procedure and retire someone above the default retirement age, they are protected from unfair dismissal and age discrimination claims. In future, if it wants to dismiss an older employee, an employer will have to follow a fair procedure and rely on one of the reasons set out in s.98 of the Employment Rights Act 1996 – capability, conduct, redundancy, illegality or some other substantial reason.
While some employers may currently allow below-par performance where they know they are shortly going to be able to retire the employee in question, in future if an employee’s performance begins to decline, it is going to be necessary for the employer to instigate the capability procedure.
Will employers be able to operate a compulsory retirement age after April 2011?
Yes, but only if they can objectively justify it, ie they can show that it is a proportionate means of achieving a legitimate aim. This is the same as the current position where an employer operates a compulsory retirement age below 65.
There is some case law on justifying compulsory retirement ages in relation to the retirement of partners in law firms, to whom the default retirement age does not apply - see Seldon v Clarkson Wright and Jakes and Secretary of State for Business, Innovation and Skills [2010] IRLR 865 CA.
Is there a transitional period for the phasing out of the default retirement age?
Yes. Although, under the proposals, employers will be unable to issue new notices of retirement using the default retirement age on or after 6 April 2011, there will be a six-month transitional period when retirement processes that have already been started can continue though to completion. However, the notification of retirement must have been given prior to 6 April 2011 and the retirement date must fall before 1 October 2011, and all the requirements of the default retirement procedure must be met.
The statutory retirement procedure allows employers to give notice of retirement one year before the retirement date. Will an employer that gives notice say in November 2010 of retirement in November 2011 still be able to rely on the statutory procedure?
No, this notification will no longer be valid under the proposals. Although the notice is given prior to 6 April 2011, the retirement date falls after the cut-off of the end of September 2011.
When does the consultation close?
The consultation closes on 21 October. The Government then intends to publish its response in November. The legislation repealing the default retirement age is likely to be published in early 2011.
Legal guidance
Default retirement age proposals: 10 things employers need to know
The abolition of the default retirement age is going to have a huge impact on how employers operate their businesses. Although the default retirement age will not be completely abolished until 1 October 2011, transitional arrangements from 6 April 2011 mean that employers do not have much time to get to grips with the proposals.
Government documents
Consultation
The coalition Government's consultation document sets out its proposals on phasing out the default retirement age (PDF format, 440K) (on the BIS website).
Formal review
The previous Government initiated a formal review of the default retirement age, and the Summary of Research Evidence (PDF format, 183K) and Summary of submissions from stakeholders and interested individuals: default retirement age (PDF format, 49K) are both available on the BIS website.
