Age directive to deliver redundancy and dismissal rights to over 65s

Over 65s are to get the same rights to unfair dismissal and redundancy payments as younger workers under new measures to outlaw age discrimination in the workplace.

The new measures, published in draft today, are the final stage of implementing the European Employment Directive. With the approval of Parliament, the regulations are due to come into force on 1 October 2006.

The draft regulations, which will not affect the age at which people can claim their state pension, will:

  • ban age discrimination in terms of recruitment, promotion and training;
  • ban all retirement ages below 65 – except where objectively justified; and
  • remove the current upper age limit for unfair dismissal and redundancy rights.

They will also introduce:

  • a duty for employers to consider an employee’s request to continue working beyond retirement; and
  • a requirement for employers to give written notification to employees at least six months in advance of their intended retirement date. This will allow people to plan for their retirement.

Trade and industry secretary, Alan Johnson, said: “Individuals should have the choice to carry on working if they want to. This is not about forcing people to work longer, it is about freedom to choose.

“Equally, to thrive in a competitive market British business increasingly bases its employment and training decisions on talent not age. Employers know that they cannot afford to ignore the skills of any worker – young or old.

“People need to be able to plan for their future and retirement should not come as an unexpected surprise. The duty for employers to give at least six months’ notice will help individuals make informed decisions about retiring.”

Reacting to the announcement, Sam Mercer, director of the Employers Forum on Age (EFA), said: “The government has set out to reassure UK plc about age regulations by introducing a default age for retirement and by allowing employers to use age criteria in limited circumstances.

“However, trying to prove age is an essential requirement in the workplace will be difficult and costly, and the default retirement age will cause as many problems as it solves.”

The EFA believes that age proposals still leave significant areas of concern for employers, including:

  • Planned retirement process: employers will have to follow a set formal process to manage retirement. Employers fear added levels of bureaucracy and difficulty in meeting expectations among staff
  • Insured benefits: in future, employers will have to provide the same insured benefits to any employee at any age, yet insurance costs increase dramatically after 65. The increased costs associated with employing someone over the age of 65, may mean age laws make it more difficult to employ older people
  • Redundancy compensation: people at different ages currently receive different rates of compensation. This will change and everyone will get the same. Government has two choices: even out to the highest rate (now only offered to those over 40) or average out to the highest rate. To even out to the highest rate could make generous redundancy schemes a thing of the past, while to average out would leave older employees worse off. This is one of the most important issues for employers (and unions) and as yet there is no decision.

David Yeandle, Deputy Director of Employment Policy at manufacturers’ body EEF, said: “Age discrimination legislation is one of the most complex pieces of employment legislation that employers have had to cope with since this government came into office in 1997.


“Whilst the government appears to have addressed many of our practical concerns, it is vital that the final regulations accurately reflect its stated policy intentions”.

Employers are invited to respond to these proposals via by 17 October 2005.

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