The Government has confirmed that the Default Retirement Age (DRA) will be phased out this year. Currently employers are able to retire staff who reach the age of 65 by giving between 6 and 12 months’ notice before they reach their 65th birthday. Employees have a right to request to stay on. If exercised, this is dealt with at a face to face meeting followed by the employer’s decision in writing. There is also a right to appeal which is dealt with in the same way. So, although employers have to tick all of the boxes, the current process provides certainty for staff planning.
The DRA is being phased out over a transitional period running until 1 October this year. The last day that an employee can be compulsory retired is 30 September 2011. This means that employers can only use the current process with employees who turn 65 on or before 30 September 2011. The last day that an employer can give 6 months’ notice is 30 March 2011. The Government recognises that some employers may already have given staff notice of retirement and has confirmed that any notice which specifies a retirement date after 30 September 2011 will be invalid. This flowchart sets out the transitional arrangements.
Post 1 October 2011
Employees will still be able to retire after 1 October 2011 but employers will only be able to force employees to retire at a set age if it can be objectively justified. If choosing to set a compulsory retirement age, employers will need to be able to show that in doing so they are responding proportionately to a legitimate aim. Some industries will find this easier than others, such as those whose employees require high levels of physical fitness. Whilst ACAS has published guidance on the subject (Working without the DRA, January 2011), it does not give clear guidance to employers looking to set a compulsory retirement age.
With employees having the right to continue working after they reach state pension age, employers have raised concerns that insurers will raise the costs of group risk insured benefits (such as income protection, sickness and accident insurance as well as private medical insurance). The Government has confirmed, however, that employers may withdraw these benefits for staff who continue working past state pension age.
Implications for Employees
The removal of the DRA does not mean that employees can no longer retire, it just means that their employer cannot force them to retire once they reach a certain age. Older employees can still voluntarily retire when they choose and draw any retirement benefits they are entitled to in line with pension scheme rules.
Implications for Employers
The removal of the DRA is an opportunity for employers to review their practices for managing employees and their performance. Without the DRA, employers have one less fair reason to dismiss. The potentially fair reasons they are left with include capability/ability, conduct and ‘some other substantial reason’. Performance or conduct concerns, whether or not they may be grounds for dismissal, should be addressed by discussion within the workplace.
Older employees may be more prone to impairments. If an impairment amounts to a disability, the employer is required to make reasonable adjustments to remove any barriers to their performance, regardless of the age of the employee concerned. Employers must also be careful not to neglect to address performance or conduct issues with older staff because, or in the expectation that, they will be retiring soon. Any such issues must be addressed consistently regardless of the age of the employee concerned. Failing to address performance or conduct issues with older staff will make matters difficult and may well be discriminatory.
- Employees able to work longer as default retirement age is phased out (independent.co.uk)
- End of the Default Retirement Age (blackaddersbusinesslegalnews.com)
The opinions expressed in this site are of the author(s) only and do not necessarily represent the opinions of Blackadders LLP.
Blackadders takes all reasonable steps to ensure that the content of this site is accurate and up to date. The site is not, however, intended as a substitute for seeking legal or other professional advice but rather as an informative guide to the services provided by Blackadders and topical legal developments. Site visitors should always seek advice tailored to their specific situation. Consequently, Blackadders accepts no responsibility for any loss or damage suffered by anyone acting or failing to act on the basis of information contained on this site. Downloading of material contained on this site is at the user’s own risk and all necessary virus checks must first be carried out by the user. Blackadders is not responsible for the material found on any web sites linked to this one and links to this site may only be made with Blackadders prior consent.
Blackadders owns the copyright in this blog and all material contained on it. The material on this site may be downloaded for personal use only and must not be altered. Otherwise, Blackadders’ written consent is required before any material on this site is reproduced, copied or transmitted in any way.
Information passed to us via this site is kept confidential and will not be disclosed to third parties except if authorised by you or required by law.
© Blackadders LLP 2022
Members of the Law Society of Scotland.
Blackadders Solicitors is a trading name of Blackadders LLP, a limited liability partnership, registered in Scotland No SO301600 whose registered office is 30 & 34 Reform Street, Dundee, DD1 1RJ. Reference to a ‘partner’ is to a member of Blackadders LLP.