Default Retirement Age

The Government have confirmed that the statutory default retirement age will be ‘‘quickly phased out” from April 2011. This is stated as being aimed at ensuring that those who wish to work beyond 65 are able to, but will potentially create a headache for some employers. Today’s budget confirms that there will be consultation about how exactly this phasing out will work, but it clearly now will occur ‘‘from April 2011”.

The Judgment of the High Court in the Heyday case last year had meant that a change to the default retirement age was highly likely, but the clear message is that the retirement age will not now simply be raised (as some had thought) but will be abolished altogether. We will have to wait and see how this will be phased out legally but you must now assume that the ability to compulsorily retire employees will soon cease. In theory you will still be able to have your own retirement age if it can be justified but the recent cases have shown that the circumstances in which it will be possible to justify retirement ages will be very limited. It will only apply to roles with specific requirements and will require clear evidence.

For anyone considering a request by an employee now to continue working beyond retirement, do take into account the possibility that by the time any extended period has been worked it may no longer be possible to fairly terminate their employment by reason of retirement. Organisations may also wish to review staff currently over the default retirement age of 65 to consider whether retirement now is in the best interests of the business (if the option might cease to be available next spring). For most employers, once the change has occurred, it will simply remove the retirement process and mean that staff remain employed until they wish to leave (or until there is another fair reason for termination). It is important to remember that if performance or conduct issues arise with employees who will be 65 from next April onwards, those issues must be addressed and not ignored on the assumption that the employee will be retiring anyway.

If you need to speak to one of our HR Consultants about this, please contact Jade on 0844 800 5932.

*Sighted in Mace & Jones E-Newsletter