Default Retirement Age Abolished

The Government has confirmed that it will abolish the Default Retirement Age (DRA) from October 2011. The process will begin in April 2011. This has been welcomed by some who say this will protect against ageism. It also has the advantage of keeping experienced valuable workers in the workplace. They, in turn, can pass on their knowledge and experience to others. In 2009, it was estimated that 100,000 workers were forced to retire.

The law should evolve and change to reflect the social and economic changes in society. The Equality and Human Rights Commission already argue that a compulsory retirement age is discriminatory. The change in the law will hopefully lead to a change in people’s views about retirement and shift away from the current ‘countdown culture’.

Some people in the 60’s do not relish the prospect of retirement and enjoy the social and financial benefits of remaining in employment.

The current law is contained in the Employment Equality (Age) Regulations 2006. Under the provisions it allows employers to force employee’s retirement at the age of 65. This is arguably an arbitrary and unfair rule. The only statutory procedure in place is that notice must be given to the employee 6 months before reaching the age of 65 of a meeting with their employer. At the end of the meeting it is entirely at the discretion of the employer as to whether he will terminate the employment. Legally there is no redress for the employee.

The changes mean that people over 65 will have full employment law rights for the first time.  The regulations are expected to take effect from 6 April 2011. From the 6 April employers will no longer just be able to give notice of a meeting. Notice made prior to 6 April will be valid on the condition retirement must take place before the 1 October 2011.

For Employers the choices are that either they end the traditional retirement age, or keep it on the basis that they can objectively justify it. The statutory notice and consultation procedure will be abolished as well. ACAS has published guidance for employers on the changes titled: ‘Working without the Default Retirement Age’. Businesses have raised concerns about the effect this will have on them.

Another aspect of this of course is that it will help public finances, in the fact that employees will be paying tax and putting off claiming their state pension. Under such austere economic times, the ageing population places a strain on Government resources. An ageing, working population could potentially save the Government £3.5 billion a year.

For advice for your business on retiring a member of staff please contact Daven Naghen on daven.naghen@maplessolicitors.com or 01775 722261.