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What's New? > Retirement Age to be Abolished

Retirement Age to be Abolished

Published: 15th January 2011

WHEN WILL IT HAPPEN?
The retirement of the DRA, "default retirement age", of 65 is to be phased out from 1st October 2011. All associated statutory retirement procedures are also to be removed from April 2011 under transitional arrangements, including the duty on employers to give a minimum of six months' notice of retirement and the right for employees to ask to work beyond their retirement age. The short notice period of two weeks is also going to be removed.

The DRA will be phased out from 6th April 2011 and no valid notices of retirement can be given after that date.  Notices given before 6th April 2011 will only be valid if the retirement takes place before 1st October 2011.

It is therefore very likely that employers will take advantage of this period of time and we may find that employers are retiring employees because they do not want to be faced with the new rules, when if the new rules were not coming into place the employee would not have been retired.
 

WHAT HAPPENS AFTER THE DRA IS ABOLISHED?
From 1st October 2011, all employers will have to follow a fair procedure relying on one of the reasons set out in section 98 of the Employment Rights Act 1996 such as capability, conduct, redundancy or some other substantial reason ("SOSR"). The presently fair reason for dismissal of retirement is likely simply to disappear.

Where there is proposed to be an enforced retirement in future, SOSR is likely to be relied upon by employers. The onus on proving the reason is fair and justified falls on the employer to prove the reason for dismissal was fair. Employees will be able to claim unfair dismissal if they are retired when they wish to continue working, and they may have other claims such as for age discrimination and disability discrimination. 


IS THIS GOOD NEWS?
The answer really depends on whether you are the employer or the employee.  For the Employer it will depend on whether you value your more experienced and mature members of staff and whether you can accommodate them and whether they are fit enough to still complete their jobs.  Many Employers truly value their more experienced members of staff and agree that they contribute a great deal to the business. 

For the employee it depends on whether they want to carry on working and also whether they are fit enough to do so.  Some Employees do want to carry on working and are happy to do so.  This is likely to depend upon the type of work the employee does.


EFFECT ON EMPLOYERS
There is likely to be a major change in potential liabilities for employers because of abolishing the DRA.
The removal of the DRA is likely to have a serious effect on employers. It will create a high risk of a new set of claims, increase the range of claims, and the value of the new claims that are made. In discrimination cases, the amount sought will also increase substantially. It is likely to give employees a far greater say in when to cease working, and more of an argument than they currently have.


WHAT CAN WE DO TO PROTECT OUR BUSINESS?
Steps can be taken in the months before implementation to manage those risks, and at least to inform employees of the company's position. That may involve formal or informal consultation, investigations, and amendments to policies, rules and contracts. Where there is no clear business case for retention, it may be good risk management to take advantage of the current regime and enforce termination before 1st October 2011 but you will need to serve notice on your employees before 6th April 2011.

There are clearly a number of serious changes happening in employment law which will effect you whether you are an employer or an employee.  It is advisable to all employers to take legal advice now on the changes and for employees to be aware of their rights. 

Please contact Anissa Hallworth at Ward Gethin Solicitors on 01553 660033 for more details and to discuss this and other important changes in employment law.

This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek our specific advice.