Default retirement age – definitely on its way out
The Government has confirmed that it will abolish the Default Retirement Age (DRA) from 1 October 2011 (with phasing out starting on 6 April). New ACAS guidance to help businesses manage without the DRA has also been published, along with the Government’s response to the latest consultation.
Currently the DRA enables employers to make staff retire at 65 regardless of their circumstances, but the Government feels the rules must change as people are living longer, healthier lives. The Government has therefore decided to proceed with their plan to phase out the DRA between 6 April and 1 October 2011. The change will not mean that individuals can no longer retire at 65 – simply that the timing of that retirement becomes a matter of choice rather than compulsion.
From 1 October 2011 no employee can be compulsorily retired by an employer because they have reached the age of 65 unless that retirement can be objectively justified.
The finer details will shortly be set out in Regulations and they will come into force on 6 April 2011.
The last day employees can be compulsorily retired using the DRA is 30 September 2011, so the last day employers can provide 6 months’ notice required by the DRA provisions is 30 March 2011. Employers will not be able to issue new notifications of retirement using the DRA on or after 6 April 2011. Employers can still use the DRA between 30 March and before 6 April 2011, but if they do so they must use the short notice provisions (i.e. less than six months but subject to an absolute minimum notice period of two weeks), under which an employee could claim compensation (subject to a maximum of eight weeks’ wages).
Jon Fisher, partner at law firm Pinsent Masons, explains the transitional arrangements …
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