Q. I have heard that the retirement age has now been abolished. I employ a number of staff who will be 65 next year and I had assumed that I could retire them then. Is this no longer so?
A. People are living longer and in many cases now want to work beyond retirement age. Until now, such employees have only been able to do so with their employers' agreement as it was lawful for employers to compulsorily retire all staff once they reached retirement age (regardless of their ability to continue to do the job). The government's view is that this constitutes age discrimination and they have now decided to change the rules.
Accordingly, as from 1st October 2011, it will no longer be lawful for employers to have a fixed (compulsory) retirement age, except in cases where there is a clear justification for doing so. Such justification would be relatively clear in organisations such as the emergency services (where a high level of physical fitness is required) but will be much less straight forward for other employers.
Assuming that employers are not able to justify such a policy, then employees can continue to work beyond retirement age, unless their retirement is justified because of their conduct, ability to the do job, or there is some other substantial reason why they should retire.
These changes have potentially huge ramifications for employees in the way they deal with the retirement of their employees and contracts of employment, recruitment policies and handbooks should all be amended appropriately. Employers should also plan and identify what retirement dismissals will be taken place this year both before and after 1st October 2011 and seek specific advice in relation to the impact on their organisation.
Those not affected by this letter
There may be some employees who this letter does not apply to, because they have been or will be given notice of intended retirement under the existing law by 5 April 2011. Some employers may want to point out that those employees are not covered by this letter, for the avoidance of doubt, and in case this letter is sent to those employees in error.
Insured benefits
Effect on related contractual provisions
It is possible that the wording of contractual provisions, such as share schemes, may have to be amended as a result of the abolition of the DRA (see Practice note, Default retirement age: implications of its abolition: The problem of "good leaver" and "bad leaver" provisions (www.practicallaw.com/1-503-7644)). If this is the case, the employer should write to the employee separately about this, setting out the proposed amendment and what impact, if any, this has on the employee's existing and future entitlements.
