Employment Law Update: Phasing out of the default retirement age

What is happening:

The default retirement age (DRA) was first introduced in 2006 as part of the Employment Equality (Age) Regulations.  Under the DRA, it became unlawful for employers to mandate compulsory retirement at ages below 65[1].

Starting in April next year, the default retirement age (DRA) will begin to be phased out over a six month transition period ending in October 2011, when the DRA will be fully abolished.

There will be a code of practice that will accompany the new legislation to help understand the full scope of the changes.  Until then, the fundamentals that employers must consider are that:

  • After October 1st 2011, retirements compulsory retirements using the DRA will be unlawful on age discrimination grounds.[2]
  • Employers seeking to dismiss employees over the age of 65 will have to follow an objective process examining capability and/or conduct on an individual basis.

How to prepare:

  • Review your performance management – It is essential that performance management is employed effectively, appropriately and sensitively for older workers.  Within a dismissal situation, the information produced by an effective performance management process will be essential in demonstrating that unlawful age discrimination has not taken place.
  • Review employment documentation – The abolition of the DRA is likely to have significant implications for Contracts of Employment, Employee Handbooks, Equal Opportunities policies and procedures, Dismissal and Redundancy policies and procedures.  It is a good idea to start looking at these now and identifying areas where it might be necessary to make amendments and/or additions to existing provision.
  • Nothing for now? – Interestingly, for many organisations the changes might not have much of an impact in the short term.  Research carried out for the Department for Business Innovation & Skills (BIS) in July this year shows that around 55% of employees work for organisations that do not have a compulsory retirement age (DRA linked or otherwise).  However, even these organisations must manage their risk and ensure that their people management processes are ready for the changes.

If you have any questions about these forthcoming changes or any other aspect of HR, people development or performance management please do not hesitate to contact us.

[1] Exceptions exist where the requirement for an earlier compulsory retirement age has been justified but the DRA is currently applicable to the vast majority of organisations.

[2] Also, no new notices of intended retirements under the DRA should be issued after April 6 2011

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