Opinion

Guide for employers on the abolition of the default retirement age (part 1)

The question of how to deal with older members of staff, particularly those who have worked for a business for a long time, can be a difficult one for managers, writes David Regan, a solicitor in the employment team at Mundays Solicitors.

At present, employers must follow a fairly strict retirement process, which penalises them for failing to comply, but does allow them to choose to retire an employee without the employee having any say in the matter. With effect from 6 April 2011, this process will begin to fall away and, from 1 October 2011, it will be age discrimination to dismiss someone by reason of retirement.

Changes to the law

The key changes to the law on retirement are as follows:

  • Notices of intended retirement date cannot be issued from 6 April 2011 onwards.
  • The default retirement age will be abolished with effect from 6 April 2011, although retirement will still be permitted in certain circumstances until 5 April 2012.

What does this mean for employers?

Notices of intended retirement can now only be issued for employees who are 65 or over (or will attain the company's default retirement age, if different from 65) on or before 30 September 2011 and the notice of intended retirement date for that employee must be issued no later than 5 April 2011. The notice given can be up to 12 months, so can take effect up to 5 April 2012.

Alternatives to the default retirement age

1. Speak to the employee "off the record"

While this option is tempting, trying to speak with an employee 'off the record' is fraught with difficulty. In brief, simply saying "this conversation is off the record", or "without prejudice", does not mean that the employee cannot use the conversation against the employer. Therefore an employee could argue that these discussions are an attempt to force them out on the grounds of their age, and consequently sue for age discrimination.

2. Speak to the employee "on the record"

The best time to do this is during annual appraisals, or at regular meetings. Indeed, it may make sense for employers to discuss future plans with all employees at appraisal time, because this will give the employer a better idea of who is looking for advancement, who is happy within their role, who is considering taking retirement, and enable them to plan accordingly.

3. Monitor performance

Many employers are concerned that the change in law means they will be stuck with staff members who cannot perform and who cannot be retired. This is not the case. In fact, under the new law, employers will have to keep a closer eye on who is performing well, and manage all employees' performance equally, regardless of age or length of service.

4. Set a corporate normal retirement age

Contrary to popular belief, employers will still be able to set a normal retirement age for employees. Although this will be age discrimination, this will be justifiable if the decision can be shown to be a proportionate means of achieving a legitimate aim.


David Regan is a solicitor in the employment team at Mundays Solicitors, a regional practice that provides advice to corporate and private clients

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This was first published in March 2011

 

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