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The default retirement age is being pensioned off this year and employers have not been given much time to prepare. Nicola Stibbs answers ten frequently asked questions about the repeal of the default retirement age, which is being phased out from April.
If you would like to receive a detailed Bevan Brittan briefing note on the repeal of the DRA and how to prepare for the changes ahead, please email here to receive a copy.
According to the government’s response to its consultation on repeal of the default retirement age (DRA), these proposals are being implemented because working longer is “good for the economy, for society and for individuals”. According to BIS, if everyone worked a year longer, our annual GDP would grow, it is estimated, by £13billion.
It is also thought that having an arbitrary set age at which individuals will retire is something of a ‘blunt tool’ – why should someone who is perfectly capable of doing their job on a Friday, be dismissed on the following Monday because they turned 65 over the weekend?
Subject to parliamentary approval, the Employment Equality (Repeal of Retirement Age) Regulations 2011 will come into force on 6 April 2011, and will repeal the default retirement age, and all associated retirement procedures.
Retirements already in train may continue, but only on the basis that
Therefore, any retirement that has been notified to an employee who turns 65 before 6 April 2011 and is due to retire after 6 April 2011, will be unlawful.
Any retirement which has already been notified and does not comply with the new regime, will need to be withdrawn and re-issued.
Yes. There will be an exemption carved out in the Regulations for group risk insured benefits, such as income protection, life assurance and sickness and accident insurance, and private medical cover. Therefore, for example, once the Regulations are in force, you may limit membership of your private health insurance cover to employees under the age of, say, 65. The government believes that this exemption is necessary in order to discourage employers from withdrawing such benefits from all employees, on the basis of cost.
Yes. The government has confirmed that there will be nothing to prevent employees voluntarily ‘retiring’ by choice, after the repeal of the default retirement age. Legally, this would be a resignation; albeit that employees may still refer to the term ‘retirement’ when referring to a decision to leave their employment with the intention of stopping work permanently and / or to draw down their occupational pension.
If you were to dismiss for these reasons, after the time limit for using the DRA procedure has expired, then you would run the risk of an age discrimination claim. The dismissal would then need to be justified objectively, in that it would need to be an objective means of achieving a legitimate aim.
Once the DRA has been repealed, employees who are ‘struggling’ should be managed out of employment using a performance / capability procedure, that is applied consistently to all staff, regardless of their age, rather than ‘retired’. Whilst the temptation may be to take the ‘softer’ route of ‘retiring’ an older employee who is struggling with work, this would run the risk of an age discrimination claim. It is, therefore, important to focus on the true reason for a dismissal, even if this might mean having a difficult discussion with the employee in question.