The Government has confirmed that the Default Retirement Age (DRA) will be phased out from April this year, despite calls from business groups to delay the process.
Currently, employers can use the DRA to compulsorily retire workers when they reach the age of 65, but from 6 April organisations will be unable to issue new notifications of retirement, and the DRA will be completely abolished on 1 October.
|Tom Flanagan, employment lawyer and partner at Pinsent Masons, explains the implications for employers of the Government’s announcement that it will be scrapping the default retirement age.
Employment relations minister Edward Davey said: “Retirement should be a matter of choice rather than compulsion – people deserve the freedom to work for as long as they want and are able to do so.
“Older workers can play an incredibly important role in the workplace and it is high time we ended this outdated form of age discrimination,” he added.
Last month, the CBI called for the abolition of the DRA to be delayed by one year until the Government had filled what it called the “legislative void” faced by employers.
The Government worked with Acas to provide guidance for employers on the abolition of the DRA. However, John Cridland, CBI director-general designate, said that the guidance is “too little too late”, adding: “The impact on employers, especially smaller ones, will be considerable.
“There is not enough clarity for employers on how to deal with difficult questions on performance. Less than three months is not enough time for businesses to put in place new procedures. The outcome will be more unpleasant and costly legal action.”
Cridland added that employers accept more people will want to work beyond the age of 65 as the population ages, but said that the Government has failed to make clear how employers should manage retirement on the basis of performance appraisals.
However, Dianah Worman, public policy adviser at the CIPD, said that the existence of the DRA has acted as a “smokescreen” for poor management.
“With the clear protection in the legislation of a right for employers to offer an objective justification of a fixed retirement age for occupations where physical capacity is a particular requirement, employers have nothing to fear from this legislation,” Worman said.
“The nearly two-thirds of employers that already operate without a mandatory retirement age say they really value their older workers, and enjoy real business benefits through the retention of valuable skills, knowledge and experience,” she added.
For further information on the abolition of the DRA, read our employers’ guide.
Outlook video: abolition of the default retirement age XpertHR’s head of content Jo Stubbs and group editor David Shepherd discuss the Government’s proposals on retirement, under which, from 6 April 2011, employers will no longer be able to rely on the default retirement age to maintain a compulsory retirement age for their workforce.
Retirement: liveflo Use this workflow to retire an employee lawfully under the statutory retirement procedure.