Removal of the Default Retirement Age - all is not what it seems....
21 February 2011
At the end of last week the Government published the draft regulations removing the default retirement age. However, these regulations have done nothing but cause confusion. Whilst the general premise, that the default retirement age is being phased out, still holds good, the detailed drafting of the transitional provisions has thrown up unexpected implications for employees who are or will reach 65 before 6 April 2011.
This is because, as currently drafted, it is only employees who attain the age of 65 between 6 April 2011 and 30 September 2011 who can be retired without leaving the employer exposed to claims of unfair dismissal and/or age discrimination. In other words, employers who wish to retire employees who have already reached 65 or who will reach 65 before 6 April 2011 will not have protection from these claims.
In a nutshell the current position under the draft regulations is as follows:-
Category 1 - employees who turn 65 between 6 April 2011 and 30 September 2011
Employers can retire employees who reach the age of 65 between 6 April 2011 and 30 September 2011 without risk of claims for age discrimination and unfair dismissal provided:-
1) you follow the statutory retirement procedures; and
2) you give notice of at least 6 months and not longer than 12 months before 6 April 2011.
Category 2 - employees who are already 65 or over or who will reach their 65th birthday before 6 April 2011
Employers will not be able to retire employees in this category without being at risk of claims of age discrimination and/or unfair dismissal. This is contrary to what was suggested by the Government before the draft regulations were published and is a result of the specific drafting of the regulations.
Category 3 - employees who reach the age of 65 on or after 1 October 2011
Employers will not be able to retire these employees without risk of claims for age discrimination and/or unfair dismissal even if notification of retirement has already been given under the existing retirement regime.
What do I do?
It remains to be seen whether the relevant drafting reflects the Government's actual intention. For the moment, we recommend that you do not issue any retirement notices whilst we wait to see if the Government issues any guidance or clarification of this seemingly arbitrary decision which puts employees who are 65 or over before 6 April in a better position than some of their younger colleagues.
However, if you do want to continue with existing plans, we suggest that you consider taking legal advice before you do so.
If you have any queries or wish to discuss this, please do get into touch with a member of the employment team.