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Employment – Default retirement age being removed

The default retirement age of 65 is being abolished from 1 October 2011. However, the steps phasing out the retirement age of 65 are happening even earlier, with significant changes from 6 April 2011.

You can only use the current procedure to retire an employee who is, or shortly due to turn, 65 (protecting against the risk of an unfair dismissal or age discrimination claim) up to 5 April 2011.

Under the current procedure you should:

  • give an employee at least 6 months notice of their intended retirement age (which must be on or before 30 September 2011);
  • allow the employee the opportunity to request to continue working (however you are under no obligation to agree to that request or even provide them with the reasons for any refusal);
  • you must also allow them to be accompanied by a work colleague to any meeting; and
  • give the employee the right of appeal against any decision to deny their request.

You may have seen some speculation in the press recently that the transition regulations could prevent an employee who has already reached 65 being retired without challenge before 1 October 2011. The government has now corrected the position and confirmed that employees who have reached 65 (or will do so before 30 September 2011) can all be retired under the current procedure provided this is completed by 30 September 2011.

If you delay retiring an employee until after 30 September 2011 there will be a new legal test in place. As the employer you will have to “objectively justify” the retirement age. This will involve demonstrating that the retirement age selected for the employee was appropriate (as “a proportionate means of achieving a legitimate aim”) and could be open to challenge by the employee through the Employment Tribunals. This is in contrast to the current procedure where the employee will have no claim against you provided the complete procedure is followed. An alternative to retiring an employee would be to manage them out for “poor performance” if their performance declines, however this is a more difficult and unattractive process for most employers (and indeed employees).

Please do not hesitate to issue any employee you wish to retire at (or over 65) with a notice of their intended retirement date preferably on or before 30 March 2011 but in any event before 6 April 2011.

If you require any assistance retiring an employee please do not hesitate to contact a member of the Employment team.