Retirement

Phasing out Retirement at 65 years

The 65 year Default Retirement Age (DRA) was phased out in April 2011. Contractual retirement ages have to be justified and there have to be a fair reason for dismissal.

The European Court of Justice has reviewed the compulsory retirement age of 65 in a Contract of Employment there could be justification if the following conditions are met:

• the employee will receive at least a state pension (some replacement income)
• compulsory retirement has been in widespread use in the relevant country for a long time; and
• the contract (ie the retirement age) has been negotiated with a union.

This is useful for employers seeking to justify a compulsory retirement age after the DRA is abolished although it is appreciated that the union agreement may not be applicable to many employers.

After October 2011 any retirement must be objectively justified and employers are only able to dismiss an employee by relying on one of the potentially fair reasons for dismissal set out in s.98 of the Employment Rights Act 1996 (capability, conduct, redundancy, illegality or some other substantial reason).

What an Employer can do:

Consider workforce planning discussion with all employees (old and young) on a regular basis to discuss short, medium and long-term goals with them.

Consider the effect on your business of having an older workforce - will you need to put any measures in place to accomodate this?

Consider performance management of all workers, including older workers.