Government confirms that the Default Retirement Age will be abolished

The Department for Business, Innovation & Skills (BIS) has confirmed that the default retirement age (DRA) will be abolished.

As planned, the DRA will begin to be phased out in April 2011, with total abolition occurring on 1 October 2011.

This means that employers will no longer be allowed to dismiss staff just because they have reached the age of 65. However, it will still be possible for employers to require people to retire if they are no longer able to do their job, based on capability. In such circumstances, employers would have to follow the Acas Code of Practice to achieve fair dismissal.

During the consultation process, employer groups expressed concerns about the abolition of the DRA and called for a delay in its introduction, but this has been ignored. In its official response to the consultation, published today, the Government has said that that the law must be changed because (1) people are living longer, (2) people working for longer is good for the economy, and (3) people should be free to decide how long they want to work for (provided they are still able to work.)

The Government has said that the dismissal of older workers should be managed either through discussion or by formal performance management procedures.

The Government recognises that there is a risk that employers may cease to offer costly risk insured benefits (such as medical insurance, income protection, life assurance and sickness insurance) as a consequence of the abolition of the DRA. It will therefore introduce an exemption to the principle of equal treatment on the grounds of age for such benefits, so it may not be unlawful for employers to discriminate on grounds of age when providing these benefits. However, this will be subject to analysis and any subsequent legislation.

The timetable for change is as follows:

6 April 2011 – Transitional arrangements to phase out the DRA and all associated statutory retirement procedures (including the “duty to consider” and “right to request” procedures) will begin. From this date, no new notifications of retirement under the DRA can be issued by employers. Paragraph 4 of Schedule 6 to the Employment Equality (Age) Regulations 2006, which allows an employer to give short notice of retirement of two weeks, will be repealed.

1 October 2011 – The DRA and the statutory retirement procedures will be abolished.

Between 6 April 2011 and 1 October 2011, only those employees who were told before 6 April 2011, and who are due to retire before 1 October 2011, can be compulsorily retired using the DRA.

Certain employers will still be able to operate a compulsory retirement age if they can “objectively justify it”. BIS gives two examples of where this might be the case – for air traffic controllers and police officers.

Acas has published a new comprehensive guidance for employers, entitled Working without the Default Retirement Age.

If you have any concerns about these impending changes, please contact me at michael.delaney@mablaw.com.

Also, please click here to find out what other changes the Government has in store for employment law in 2011.