Retirement policies: An age-old problem

Update 14 February 2011: the default retirement age (DRA) will be scrapped from 1 October 2011, with transitional arrangements from 6 April 2011.

How to respond to requests from staff who want to work past retirement age. By Adele Martins

Politicians, newspapers and academics have been discussing the implications of an ageing workforce for a number of years. However, many organisations still do not have a formal retirement policy in place – preferring instead to rely on the premise that as people age they will make the decision that they no longer wish to work and will therefore retire willingly.

But with decreasing pension provisions and raised lifestyle expectations, many employees now consider remaining in employment for longer. The practicalities of an ageing workforce have been tackled to some degree in the Employment Equality (Age) Regulations 2006, which will come into force on 1 October 2006. Discrimination on the grounds of age is outlawed and specific provision is made for employees who wish to work beyond their employer’s normal retirement age.

Employers’ obligations

After 1 October firms that do not have a retirement policy will undoubtedly fail to follow appropriate procedures and, therefore, will breach the regulations. A good policy should act as a guide for employees and, equally importantly, as a checklist for HR professionals and managers.

Just as many employers introduced flexible working policies for parents to ensure that the requirements of the Flexible Working (Procedural Requirements) Regulations 2002 were implemented and followed, employers should be doing exactly the same now in relation to the retirement provisions of the age regulations. Or in the event that a policy already exists, they should ensure that it is appropriately updated.

The age regulations impose a positive obligation on employers to consider an employee’s request to work beyond retirement – whether that is the employer’s normal retirement age or the statutory default age of 65. The procedure that must be followed is set out in Schedule 6 of the regulations and, in many ways, reflects the procedural requirements of the 2002 flexible working regulations – providing employers with a natural starting point for formulating a retirement policy. A well-drafted policy should include an introductory paragraph explaining the purpose of the policy as well as the rationale behind it.

While the true rationale may simply be to ensure compliance with the age regulations – it will also be to ensure that employees have the opportunity to work beyond the normal retirement age and that requests to do so are treated consistently and transparently.

Policy considerations

By necessity, the policy will follow the statutory steps set out in Schedule 6 of the regulations. To ensure compliance with the employer’s duty to notify employees of their right to make a request to continue working, the employer should include the policy in the company handbook – and require employees to confirm that they have received and read it.

The policy should specify the information that the employee needs to include in a request (a standard application is advisable) and the requirements with which the employee must comply, ie:

  • whether the proposal is to continue working for an indefinite period, for a stated period or until a stated date
  • that the employee’s application must be in writing
  • that only one request (and appeal) can be made in respect of an intended date of retirement
  • that the application must be made at least three months and not more than six months before the intended retirement date.

Once an employer receives a request under the regulations it is duty-bound to consider it in accordance with the provisions set out in paragraphs 7, 8 and 9 of Schedule 6. Therefore, any policy must comply with those requirements.

Possible problems

The policy should provide for the employer to hold a meeting with the employee to discuss the request. According to the regulations, this must be done within a reasonable period. The temptation when drafting any policy is to encourage efficiency by imposing short deadlines.

However, the disadvantage of this is that if business pressures mean that the timetable cannot be met, employee expectations are compromised and this can damage the working relationship. Until case law provides guidance on what is ‘reasonable’, a period of 14-28 days would appear prudent. A meeting can only be avoided if agreement on the continuation of the employee’s employment is reached before the end of the reasonable period.


Once the meeting has been held (or earlier agreement reached) the employer must notify the employee of the decision in writing. Such notice must, if the request is agreed, state that the employee can continue working indefinitely, or for a specified period (confirming the new retirement date) as appropriate. If the request is declined, the notification must state that the employer wishes to retire the employee and confirm the date on which the employment will end.

The employee has the right to appeal against the employer’s decision and the policy should include an appropriate appeal procedure. Again, a standard form of application may be appropriate. The regulations require that any appeal is submitted within a “reasonable period” and to minimise the risk of dispute, the policy should specify the time period that the employer regards as reasonable.

Working to timescales

A period of 7-14 days would probably be regarded as reasonable, taking into account an employer’s need to make appropriate business plans. A meeting must be held within a reasonable period – unless agreement is reached beforehand, and again the employer must notify the employee of its decision in writing.

In addition to setting out the procedural steps that must be followed, the policy should remind the employee of their right to be accompanied to a meeting by a fellow employee or trade union representative (in accordance with section 10 of the Employment Relations Act 1999).

Provided a policy is appropriately drafted and complies with the requirements of the regulations, tribunal claims for failure to follow appropriate procedures should be minimised.

Employers should ensure that the policy is workable and is drafted in such a way as to ensure flexibility – for example, a strict obligation to hold a meeting within 14 days of a request may well be unworkable.

If the policy provides that a meeting will be held within a reasonable period, which will, provided it is practicable, be no more than 14 days, the requirements of the regulations will be met, but a technical breach by holding the meeting on day 16 is unlikely to prove too damaging. As with every policy – the trick will be balancing the requirements of the regulations with a policy that is practical and meets the needs of the business. Only case law will provide guidance, and will ultimately dictate what is appropriate.

Adele Martins is a partner at Magrath & Co

Retirement policy – what to include

The policy must include:

  • The procedure an employee must follow to
    submit a valid request.
  • The steps that the employer must then follow – including the requirement to hold a meeting with the employee and the employee’s right to
    be accompanied to that meeting.
  • Details of the employee’s right to appeal.
  • When and how often employee requests can
    be made.

The right to work beyond retirement

  • From 1 October 2006, employees will have the right to work beyond retirement.
  • Retirement is either the employer’s “normal retirement age”, or 65.
  • There is a set procedure that the employer and employee must follow.
  • Employees will have the right to bring claims before a tribunal if they suffer age discrimination, are denied the right to make an application to work beyond retirement or suffer a detriment as a result of doing so.

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