The Default Retirement Age (DRA) will be history by October 2011 under proposals published for consultation by the Government this week.

The plans actually mean that the procedures which support the DRA will start to be phased out from April 2011.

Currently employers can make staff retire at 65 regardless of their circumstances. Whether this is fair, with people living longer and wanting to remain active, has been the subject of much debate and litigation. The Government has also been looking at increasing the age at which people can access the state pension as population demographics change.

The consultation says that the move will help employers by removing the administrative burden of statutory retirement procedures. With the DRA removed there will be no reason to allow employees to the right to request working beyond 65 and neither will there be a need to give at least six months notice of retirement.

Many employers’ organisations are concerned at the change and the consultation will see some frank representations made. Before the introduction of the DRA employees over the age of 65 did not have the right to make claims for unfair dismissal. However, with the abolition of the DRA there will be no return to that situation. Employees will continue to be able to make claims for unfair dismissal and could even cite discrimination on the grounds of age, if they think it relevant, as part of the claim. If an employer wishes to dismiss (or retire) an older employee then they will have to rely on one of the remaining fair reasons at Section 98 of the Employment Rights Act 1996 (ie capability, conduct, illegality, redundancy or some other substantial reason). Employers are well advised to review their capability procedures now in order to be ready for the proposed change in legislation.

Although the Government is proposing to remove the DRA, it will still be possible for employers to operate a compulsory retirement age, provided it can be objectively justified. This is the current position for retirement ages under 65. It will be up to the employer to show that any retirement age is proportionate and contributes to a legitimate aim. Any employers seeking to retain a compulsory retirement age will need to seek legal advice on whether their plans could be objectively justified.

The consultation period is set to end on 21 October 2010. After this the findings will be published along with draft legislation.

30 July 2010

MGW