Retirement Age Changes
The Coalitional Government has put into action its proposals to remove the current default retirement age (DRA) of 65.
Scrapping the DRA is a radical change to employment law which is going to be made relatively quickly and could have a significant impact on business. The Government proposes that the DRA disappears completely by 1 October 2011. This means that each ‘retirement’ after this date could potentially result in an age discrimination claim.
What this means in practice is that businesses will have two choices after 1 October 2011:
- Operate without a retirement age; or
- Continue to use a retirement age and try to objectively justify this if it is challenged as age discriminatory.
If you decide to operate without a retirement age you should make sure you understand how this will work in practice for your business. In particular, it may impact your workforce planning as there could be staff you were expecting to retire who choose not to.
If you decide to continue applying a retirement age, you should consider the objective justification for any such age and, ideally, put in place a paper trail to document this. It is not easy to prove that a retirement age is objectively justified and we recommend taking proper advice before deciding to continue using a retirement age.
The Government is also considering publishing guidance or a code of practice (along the lines of the ACAS code) to help employers to manage retirement discussions in the future.
For more details on the changes, the government consultation document, a recent Court of Appeal case and what businesses should do moving forward consult our Ageing Workforce Bulletin
Foot Anstey submissions to the DRA call for evidence were selected for independent analysis. Details were published in the consultation document, along with other pieces of commissioned research. To review the summary review please click here.
