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Retiring the default retirement regime

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The government is proposing to phase out the default retirement age (DRA) from 6 April 2011. As at that date, there should be no new notifications of compulsory retirement and the procedure set out in the Employment Equality (Age) Regulations 2006 (i.e. notifying the employee of their retirement date and considering requests to work beyond retirement) will be scrapped.

However, under the new proposals, there will be transitional periods in place from 6 April 2011 to 1 October 2011. Where an employee has been notified of proposed retirement before 6 April 2011, compulsory retirement of that employee will not be unlawful so long as the retirement takes effect before 1 October 2011.

By way of example, if an employee is due to retire on 4 October 2011 (i.e. after 1 October 2011), having been notified on 3 April 2011, compulsory retirement is likely to constitute unfair dismissal and/or unlawful age discrimination, unless that dismissal on those grounds can be objectively justified (notwithstanding the fact that the employee was notified of the retirement date prior to 6 April 2011).

It is likely to be very difficult for employers to be able to prove that a DRA is objectively justified. The government has set out the following guidance on objective justification in its consultation document:

‘Proportionate’ means
-  What the employer is doing is actually achieving its aim
-  The discriminatory effect is significantly outweighed by the importance and benefits of the legitimate aim
-  There is no reasonable alternative to what the employer is doing. If the legitimate aim can be achieved by another less discriminatory route, the employer must opt for that route.

‘Legitimate aim’ means
-  Economic factors such as the needs and efficiency of running a business
-  The health, welfare and safety of the individual
-  The particular training requirements of the job.


This is a very narrow test and an employer will have to produce solid evidence to support the assertion that a DRA is necessary.

If the employee has already agreed to retire in October 2011, he/she may not want to continue to work after that date. In that scenario, the employer will need to tell them that the Company cannot enforce retirement such that the employee will need to resign.

On the other hand, if the employee wants to keep working and he/she is simply not good enough, the employer will need to address that issue as a capability matter in the normal way, as with any other employee.

Finally, I must stress that these are only proposals at this stage. The Government has published a consultation document, on which responses must be submitted by 21 October 2010. Following that, draft legislation will be published.

 

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