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Default Retirement Age to go by October 2011
by Ian Neale 29/07/2010    Printer-friendly version of this page

In a new consultation launched today, the Government confirms the demise of the Default Retirement Age (DRA). It intends to phase it out over just six months from April next year. The consultation document sets out the background to the DRA, and explains how the Government is proposing to remove it.

A national DRA of 65 was introduced by the Employment Equality (Age) Regulations (SI 2006/1031) from 1 October 2006. An employer can compulsorily retire an employee at the age of 65 or above, without that being deemed to be unfair dismissal or age discrimination, provided they follow a set retirement procedure. Earlier retirement ages are unlawful unless employers can objectively justify them.

The procedure set out in the regs means that employees have a statutory right to at least six months' notice of retirement and a right to request working longer, which the employer has a duty to consider (but no obligation to agree to). As well as removing the DRA to enable people to work for longer, the Government is also proposing to scrap this 'right to request' as no longer necessary. If an employer wishes to dismiss (or retire) an older worker this will still entail following a fair procedure and relying on one of the reasons set out in section 98 of the Employment Rights Act 1996 (capability, conduct, illegality or some other substantial reason). It will also be possible for individual employers to operate a compulsory retirement age, provided that they can objectively justify it as a proportionate means of achieving a legitimate aim (see EHRC guidance). Objective justification is not easy to demonstrate, however, as the condoc acknowledges.

The consultation document seeks input on whether the Government could provide additional support for individuals and employers in managing without the DRA or a statutory retirement procedure, including the possibility of further guidance or a more formal code of practice on handling retirement discussions. Finally, the consultation document covers two particular problems already highlighted during the review, which might have unintended consequences when the DRA is removed: group insured benefits (life assurance; medical cover; income protection schemes and critical illness cover) and employee share plans.

The consultation builds on the joint review by the Department for Business Innovation and Skills (BIS) and the DWP, which has been considering whether the DRA of 65 remains appropriate and necessary. This review was announced a year ago by the previous government in its Building a Society for all Ages strategy, and accelerated in January 2010 (see Aries article). A summary of submissions from interested parties has been published. The new Government committed in the first official Coalition Agreement to phasing out the DRA.

The decision to scrap the DRA will be welcomed by many individuals who have recognised they will need to maintain a source of employment income beyond age 65. Employers, on the other hand, might be less enthusiastic: not only in view of the potential additional employment costs and the disagreeable outcome of having to demonstrate reduced capability or competence in order to retire an older worker, but also the very short time in which to adjust. However the Government believes that although some employers and their representative bodies believe retirement ages are necessary, the evidence shows a minority of employers use retirement ages, and that the majority of requests to work beyond this are agreed.

Comments are requested by 21 October 2010. There are several ways to respond to the consultation. Besides a conventional written submission, you can

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