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Is this the end of compulsory retirement?

Following the introduction of the Employment Equality (Age) Regulations 2006, employers have been within their rights to retire an employee at the age of 65 provided they follow procedure. The Government have recently announced radical and controversial proposals to phase out the default retirement age (DRA) by October 2011.

In 2009, this right was challenged by Age Concern to the European Court of Justice and the High Court (the Heyday case). Currently, the Age Regulations provide for a DRA of 65. At (or above) this age, an employer can commence the statutory procedure for retirement. The employer must serve a notice on the individual employee specifying their intended retirement date – this must be done at least 6 months but not more than 12 months in advance. Although the individual can then request to work beyond the intended retirement date, employers are not obliged to agree to their request. Provided you follow the procedure set out by the Regulations, the retirement dismissal would be fair and you would be protected against claims of unlawful age discrimination.

The Government has now announced plans to phase out the DRA of 65 from April 2011. The DRA would then be entirely removed from October 2011. At this stage, the proposals are subject to consultation. A copy of the consultation is available on the website for the Department for Business, Innovation and Skills (www.bis.gov.uk/retirement-age) and the consultation is now open. Any employers who wish to respond will have until 21 October 2011 to do so. Under the current proposals, from 6 April 2011, employers will not be able to issue any further notifications for compulsory retirement following the existing procedure.

What does this mean for employers?

From 6 April 2011 to 1 October 2011, it will only be possible for employers to compulsorily retire (using the DRA provisions) those:

• who were notified of their intended retirement date prior to the 6 April 2011 and
• for whom the intended retirement date is before the 1 October 2011.

Once the retirement age is phased out an employer can continue to have a compulsory retirement age however you will only be able to do so lawfully if it can be ‘objectively justified’ under the discrimination legislation. This is a much higher burden on employers who will face the risk of an age discrimination claim in the event of compulsorily retiring any employees.

Views as to the default retirement age are particularly polarised with those supporting employers groups concerned about the loss of flexibility for employers in terms of workplace planning and others being concerned about the ability of an employer to essentially force an employee out of the workforce when they may want to continue working.

One aspect of the consultation is to introduce further guidance or a more formal code of practice on handling retirement discussions. This would be a welcome step although, clearly, will not provide the protection that employers may require and currently are able to take advantage of.

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