Default retirement age abolition

Summary

• The Default Retirement Age (DRA) and the associated statutory retirement procedure has been abolished.
• From 6 April 2011, it will no longer be possible to compel employees to retire unless the retirement can be justified.
• However there are transitional arrangements enabling some retirements set in motion before 6 April to continue to completion. Where those provisions apply, it will be possible to effect the retirement without risk of a claim of age discrimination or unfair dismissal.
• Employers can use the statutory retirement procedure to retire employees who reach the age of 65 (or the employer’s normal retirement age, if that is higher) on or before 30 September 2011 provided they are notified of the retirement (and their right to ask to stay on) on or before 5 April 2011.
• In practice the last date the default retirement age can operate will be 5 October 2012. This will be the case where an employer gives the maximum possible 12 months’ notice of intention to retire on 5 April 2011 specifying an intended retirement date of 5 April 2012, and the parties subsequently agree a 6-month fixed-term extension of employment with a new retirement date of 5 October 2012.
• Employers can continue to use a compulsory retirement age after 1 October 2011 - but only where they can justify it as a proportionate means of achieving a legitimate aim.
• To help employers manage the consequences and costs of operating without compulsory retirement, there is an exemption covering insured benefits with employers not required to offer such benefits to the over-65s.
• The exemption from age discrimination law that permits employers to reject job candidates who have reached or are approaching the retirement age for the job has been revoked.

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