Default retirement age to be abolished
On 17 February 2011, the coalition Government published the draft Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011, which will abolish the default retirement age of 65 and the associated statutory retirement procedure. The Regulations, which are due to come into force on 6 April 2011, contain transitional provisions to allow the default retirement age and statutory retirement procedure to be phased out. Due to confusion over the transitional provisions, the Government has subsequently amended the draft Regulations.
Employers will be prohibited from issuing new notifications of retirement under the current statutory procedure on or after 6 April 2011.
However, the draft Regulations provide that, during the transitional period, retirements that were already in motion can continue through to completion, provided that:
- the employer issues the notification of retirement prior to 6 April 2011;
- the employee will reach age 65 (or the employer's normal retirement age if that is higher) on or before 30 September 2011 (the previous wording of the Regulations suggested that retirements notified on or before 5 April 2011 could continue through to completion only if the person retiring reached the age of 65 (or the employer's higher normal retirement age) between 6 April and 30 September 2011); and
- the requirements of the statutory retirement procedure are met.
The employer must give the employee between six and 12 months' notice of retirement. This notice can expire after 30 September 2011, as long as the employee is 65 (or the employer's normal retirement age if that is higher) on or before this date.
New provisions have also been added to the Regulations making it clear that, under the transitional provisions, employers can still agree a maximum six-month extension of employment beyond the proposed retirement date (any longer extension would require a second notice of retirement under the statutory procedure, which the employer will not be able to issue after 5 April 2011). An employee who wishes to make a request not to retire is obliged to do so more than three months, but not more than six months, before the intended date of retirement. An employee who is given the maximum 12 months' notice of retirement on the last possible date of 5 April 2011 will have a proposed retirement date of 5 April 2012 (according to the Department for Business, Innovation and Skills). The last date for a request for an extension to be made more than three months before this intended date of retirement will be 4 January 2012. A six-month extension from 5 April 2012 would take the employment up to 5 October 2012, making this the last possible date for a retirement under the statutory procedure (according to the Department for Business, Innovation and Skills).
It is important to note that this is a change to what was previously stated in 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 Acas guidance Working without the default retirement age (PDF format, 856K) (on the Acas website) has now been changed.
The draft Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 remove the provisions in the Equality Act 2010 that provide that the dismissal of an employee at or over the default retirement age of 65 by reason of retirement does not constitute age discrimination. The Regulations also remove retirement as a potentially fair reason for dismissal from s.98 of the Employment Rights 1996. Accordingly, employers may continue to prescribe a compulsory retirement age on or after 6 April 2011 only where they can justify it as a proportionate means of achieving a legitimate aim.
Employers that do not prescribe a compulsory retirement age must rely on one of the designated fair reasons for dismissal set out in s.98 of the Employment Rights Act 1996, and follow a fair procedure in accordance with ordinary unfair dismissal rules, in order to achieve a fair dismissal. Section 98 cites reasons relating to capability, conduct, retirement, redundancy, illegality, and some other substantial reason capable of justifying dismissal, as potentially fair.
- Outlook video: final possible retirements under the default retirement age XpertHR's head of content Jo Stubbs and senior employment law editor Clio Springer discuss which retirements can still continue through to completion using the default retirement age and statutory retirement procedure, which will be abolished from 6 April 2011.
- Podcast: Abolition of the default retirement age XpertHR employment law editor, Susie Munro, discusses the repeal of the default retirement age and associated statutory retirement procedure, giving guidance on: the transitional provisions relating to the repeal of the regime; key dates that employers need to be aware of; and what employers will need to show if they want to compulsorily retire employees on or after 6 April 2011.
- Government amends draft retirement Regulations after confusion over transition XpertHR explains why the coalition Goverenment amended the draft retirement Regulations.
- 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.
- The XpertHR employment law manual sets out the law relating to age discrimination and justification.
- The XpertHR FAQs section includes FAQs on the legal and practical implications of the abolition of the default retirement age.
- Managing retirement: XpertHR resource pack The management of retirement in 2011 will present particular challenges with the abolition of the default retirement age. We round up the relevant information on XpertHR that your HR team needs to know, with a particular focus on the effects of the abolition of the default retirement age.
Government guidance and documents
- Read the Draft Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 (on the National Archives Website), which abolish the default retirement age.
- The coalition Government's consultation document Phasing out the default retirement age (PDF format, 440K) is available on the BIS website together with the Government's response Phasing out the default retirement age: Government response to consultation (PDF format, 111K).
- Acas guidance on Working without the default retirement age (PDF format, 343K) (on the Acas website) includes guidance on managing dismissals and justifying a compulsory retirement age after 1 October 2011.
- The Government has published updated guidance on Managing without a fixed retirement age (on the Business Link website).
- 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.