I’ve heard that the default retirement age (DRA) is being scrapped soon. What do I need to be aware of, and how can I retire employees once the DRA has gone?
The DRA will be phased out from 6 April 2011, meaning that you will no longer be able to ask employees to retire upon turning 65 for that reason alone. The last day upon which you can give an employee notice of intention to retire him under the DRA provisions is 5 April 2011, provided that the employee has attained, or will attain, the age of 65 on or before 30 September 2011. Dismissals for these employees can take place after 1 October 2011, although you would still have to follow the statutory retirement procedure.
Any “retirement” dismissals for employees who do not fall into the category above (ie those to whom you give notice of retirement after 5 April 2011 or those who turn 65 after 30 September 2011) will have to be justified under the Equality Act 2010. If this is not possible, the dismissal will be regarded unfair, and will be discriminatory.
You will have two options with regards to retirement age: stop retiring people and use other dismissal options, or enforce an objectively justifiable compulsory retirement age.
Working without a fixed retirement age means that employees will gain more freedom to decide how and when they cease work. A potential criticism of this system is that it may lead to uncertainty for employers. Considering the circumstances of each employee on a case-by-case basis leaves little scope for reliable succession planning.
However, this is no different from how employees should be treated in other areas of the law. If health or performance issues do arise, they should be dealt with in the usual way.
If you want to continue enforcing a compulsory retirement age, you will have to show:
- that a legitimate aim is being met;
- that having that particular retirement age meets that aim; and
- that it is proportionate to use that retirement age as a means of meeting that aim.
As well as satisfying these criteria, any dismissal based on the compulsory retirement age must be procedurally fair.
Early indications suggest that employers will struggle to both justify enforcing a compulsory retirement age and ensure the procedure is fair, as many of the potential justifications – such as ensuring competence and fairness to all age groups – are tainted with age discrimination. It appears that justifying a dismissal on grounds of capability for older employees would be hard to prove without a detailed, business-specific analysis of performance and risk.
Even should such a legitimate aim be found, employers may struggle to show compulsory retirement as a proportionate means of achieving it.
Whether you decide to abolish the retirement age or attempt to justify a compulsory retirement age, you should adopt a clear, consistent performance-management policy that is applied across the workforce, regardless of age.
Laura Kearsley, employment associate, Weightmans LLP
XpertHR FAQs on the abolition of the default retirement age