The Government has announced that the statutory default retirement age (“DRA”) of 65 will be abolished by 1 October 2011. There will be a phasing-out of the DRA from April 2011. Employers who notify employees before 6 April 2011 of a retirement date before 1 October 2011 can lawfully retire employees under the existing rules provided the minimum notice requirements are met. Between 6 April and 1 October 2011 there will be certain ‘transitional provisions’.
The current statutory retirement procedures oblige employers to give employees at least 6 months’ notice of intended retirement and allow employees to request to work beyond their intended retirement date. If such a request is made, a prescribed statutory procedure must be followed. These statutory requirements and procedures will also be removed.
Despite these changes, employers will still be entitled to specify a compulsory retirement age applicable to their own employees. However, employers must be able to show that their compulsory retirement age can be ‘objectively justified’ by demonstrating that it is both ‘proportionate’ and contributes to a ‘legitimate’ aim.
In practice, employers will not be able to follow a ‘rule of thumb’ that 65 is a reasonable age to retire employees. They must look at the needs and circumstances of their own business to be able to justify choosing a particular retirement age.
The Government has indicated that they also intend to implement raising the state pension age to 66 faster than had previously been scheduled