Latest Legal News - Default Retirement Age Abolished (January 2011)

As forecast by Butcher Burns LLP in our article in September 2010, the Government has abolished the default retirement age of 65 and the existing statutory retirement procedures will be phased out by October 2011.  This change will give employees 65 and over the same job security as younger employees because employers will no longer be able to force employees to retire at 65 from October 2011.

Following the abolition of the default retirement age, an employer that wishes to retire an older employee will need to follow a fair procedure under the ordinary unfair dismissal rules and show that the dismissal of the employee is for one of the potentially fair reasons for dismissal.  These include performance, redundancy and conduct.  It is thought that one of the effects of this will be an increase in employment litigation and also that employers could face the double threat of age discrimination and unfair dismissal claims from older employees who have been dismissed.

There's also a fear that the abolition of the default retirement age will damage the supportive culture within a business and may prevent older employees from having a dignified exit from employment.

Since retirement will no longer be a statutory reason for dismissal, it will become more important for employers to monitor the performance and efficiency of all employees and to implement proper performance management procedures so that, where necessary, older employees can be dismissed on grounds of capability/conduct. 

Next Steps for Employers

The abolition of the default retirement age is phased and what this means for employers is that:-

• Any retirement process that has already started can continue if notice of retirement is issued before 6^th April 2011, the date of retirement is before 1^st October 2011 and the statutory procedure is followed;
• Employers should identify any imminent retirements and, where appropriate, issue retirement notices for employees who reach retirement age before 1 October 2011 as soon as possible because after 6^th April 2011 no further retirement notices can be issued;
• From 1^st October, the existing statutory retirement procedures are completely abolished;
• Conversations about aspirations and retirement plans for all employees should become part of the business's normal appraisal system;
• Employers should review and amend their current performance management procedures and documentation, delete any reference to a fixed retirement age, and implement regular performance reviews and record the results;

Employers should seek legal advice when faced with performance issues with older workers or when wishing to dismiss.

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