The Government has recently confirmed that the Default Retirement Age (DRA) of 65 is to be removed from April 2011.
Proposals announced last summer suggested that the DRA would be phased out between April and October this year, after which employers would not be able to use the simple fact that an employee has reached the age of 65 to dismiss them.
The statutory retirement procedure, which includes informing the employee of their intended retirement date 6 – 12 months in advance, and giving the employee the right to continue working past that date, will also be abolished. The following timetable will now be used:
• from 6th April 2011, employers will not be able to issue any new notifications for
compulsory retirement using the DRA;
• between 6th April 2011 and 1st October 2011, only people who were notified before 6th April 2011, and whose retirement date is before 1st October 2011 can be compulsorily retired using the DRA;
• from 1st October 2011, employers will not be able to use the DRA to compulsorily retire employees.
It is still possible, for the time being, for clients who use the DRA to safely retire an employee who turns 65 before 1st October 2011. The last date to safely notify the employee is 30th March 2011, giving 6 months’ notice of the intended date of retirement of 30th September 2011. Although the timetable states that notices may be given up until 6th April 2011, any notice given between 1st and 5th April 2011 inclusive would be given under the ‘short notice’ provisions in the Equality Act 2010, i.e. giving less than the requisite 6 months’ notice, which may incur an award of up to 8 weeks’ pay at tribunal, although still potentially enforcing a fair retirement on the employee.
Even from 1st October 2011, it is still possible for an organisation to operate a normal retirement age but only when the retirement age is objectively justified. The test for objective justification is difficult to pass but succession planning, for example, may be capable of passing the test.
The abolition of the DRA and the statutory retirement procedure does not mean that employees cannot retire from their jobs. It just means that it becomes much more their choice over when to end their working life because the employer’s ability to enforce it on them has been severely restricted.
Although the above timetable has only been confirmed in relation to Great Britain, the Northern Ireland Government has also expressed an intention to stick to the same dates to phase out the DRA and the statutory retirement procedure.
Any client wishing to retire an employee should always call the 24 Hour Advice Service on 0844 892 2772.