New Government: New Plans for Retirement

You may recall SA Law’s blog on 25 September 2009, in which we confirmed that the High Court had ruled it was legal for employers to force workers to retire at the age of 65. The government has now made a dramatic u-turn and proposed that the current default retirement age of 65 is scrapped in the UK from October 2011.

The implications are that employers would no longer be able to dismiss staff because they had reached the age of 65.

The current position is that an employer can meet with an employee 6 to 12 months before their 65th birthday and notify them of their intention to retire them at that date. An employee is entitled to put forward their case not to be retired but the only obligation on an employer is to consider this. It is the employer’s discretion as to whether or not to terminate employment.

Groups that have long campaigned for the default retirement age to be scrapped have welcomed the decision. Marion Birch, Chief Executive of Age UK Hertfordshire has told SA Law, “Older people are one group of society that are not protected from discrimination by legislation so we are delighted that people over the age of 65 will have full employment rights for the first time. Age UK Hertfordshire is pleased that the Government is finally sweeping away this discrimination against older people and will be allowing individuals the dignity of choosing when to retire.  Enabling people to work and contribute their skills for longer not only keeps them active, it also makes economic sense as our population ages.”

Given the length of notice required to notify an employee of their intended retirement, it is likely that these measures will come into force from 6 April 2011.
The main concern appears to be the length of time in which employers will need to come up to speed with the new law. Really they have only just got to grips with the retirement process and employers will need to deal with their new workforce at that time in particular;

•    reviewing policies and practices such as benefits to ensure these are not discriminatory to employees over the age of 65 years;
•    consider alternatives to forcing retirement such as adjustments to role, variation of terms or flexible working.

If you have any questions about the new retirement plans, do not hesitate to call Nikki Petken on 01727 798023