The Government has now confirmed that the current default retirement age of 65 will be abolished. With this, the statutory retirement procedure will also be removed.

Employers must now consider how they will deal with retirement in the future and address retirement ages and policies which are set out in any contracts or handbook documentation.

Employers who fail to address this now could face claims of unfair dismissal and age discrimination in the future.

TRANSITIONAL PROVISIONS – there is now a limited further window during which compulsory retirements can be carried out:

5 April 2011 is the last day you can notify an employee of retirement. You must give them 6 – 12 months notice of the intended retirement date (“IRD”) and follow the statutory procedure.
5 April 2012 – this is the last day on which an employee’s compulsorily retirement can take effect (i.e. the latest IRD that can be set).
The employee to be retired must attain the age of 65 (or the normal retirement age in the organisation if this is higher) before the 1 October 2011 – i.e. they must be 65 prior to 1 October 2011 for you to utilise the transitional arrangements.
4 January 2012 is last day an employee can make a request to their employer not to retire on the IRD. This request should be made between 3 – 6 months before the IRD.
October 2012 – if an employer agrees to allow the employee to work beyond their IRD, the maximum extension possible within the DRA provisions is 6 months. 5 October 2012 will then be the latest possible date for retirement in such situations.

Ensure that the statutory procedure is followed carefully – you must comply with the prescribed procedure which provides the employee the opportunity to request to work beyond the IRD and places you under a duty to consider their request.

Are there any employees who you wish to retire now using the current procedure? If so, ensure the notice of intended retirement is issued prior to 6 April 2011.


Option 1 -Maintain a fixed retirement age – employer justified retirement ages

Maintaining a fixed retirement age (or ‘Employer Justified Retirement Age’ as ACAS now refers to this) will amount to age discrimination unless this can be objectively justified.

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“The test of objective justification is not an easy one to pass and it will be necessary to provide evidence if challenged; assertions alone will not be enough. When looking to establish an EJRA it can be helpful to first set out the reason why you wish to do so clearly on paper. Then ask yourself whether you have good evidence to support this reason and then finally consider if there is an alternative, less or non-discriminatory way of achieving the same result.” (ACAS: Working without the Default Retirement Age.)

In overview, objective justification will require you to show that:
a legitimate aim is being met;
having a particular retirement age meets that aim; and
the retirement age is a proportionate means of achieving that aim.
This is likely to be a difficult hurdle for employers where alternative practices (such as medical or fitness checks) would be sufficient – and less discriminatory.
Unfortunately there is no set list of what is an ‘objective justification’ and the case law in this area will inevitably develop in the coming years – at the expense and uncertainty of employers.

The reality is that it will very difficult for many employers to justify their current retirement ages.

Option 2 -Remove your fixed retirement age

If you do not have a fixed retirement age you will not be able to ‘retire’ employees. Instead you will have to rely on employees’ own decisions as to when to retire or dismiss them for the potentially fair reason of ‘capability’.

However, to effect a fair capability dismissal you must follow a fair procedure – which will really involve performance management

ACAS suggest that it will help to have workplace discussions with all employees about short, medium and long term aims and plans. Don’t only do this with your older workers though!

Action points:
Review fixed retirement ages and whether you intend to keep this for all (or any part) of your workforce.
Can you show that any fixed retirement age can be objectively justified – and importantly, document this by obtaining appropriate evidence?
Amend contracts and policies to remove any fixed retirement ages which you do not think are supported by objective justification.

Ensure your capability and performance management procedures are adequate and that those with responsibility for implementing the procedures are properly trained in doing so and reminded to keep a paper trail of the process and steps undertaken

Be consistent in implementing any performance management or capability procedures – do not only apply this to older staff members!

You should also review the terms of any employee share schemes (eg. good and bad leaver provisions which refer to the default retirement age or your fixed retirement age) which may need to be amended to be brought into line with your approach.