What will be the impact on employers?
The government has announced that it is planning to phase out the default retirement age of 65. Under the proposals, from 1st October 2011 employers will not be able to rely on the default retirement age to justify a dismissal for a compulsory retirement. Employers will be unable to issue new notifications of retirement using the default retirement age on or after 6th April 2011.
The changes will also include the removal of the associated statutory retirement processes, including the employer’s duty to provide notice of retirement and the employee’s right to request to work beyond normal retirement age.
An employer will only be able to use a compulsory retirement age to dismiss an employee where it can prove that it is necessary to meet legitimate employment policy, labour market or vocational training objectives, and that a compulsory retirement is an appropriate and necessary means of achieving these objectives.
Where such justification for compulsory retirement cannot be shown, older employees have full protection from unfair dismissal and a fair dismissal must rely on one of the reasons set out in section 98 of the Employment Rights Act 1996 i.e. capability, conduct, redundancy, illegality or some other substantial reason.
We are advising employers to appraise and consult with all employees who will be aged 65 or over on 30th September 2011 and, where the needs of the business are best served by compulsory retirement, to initiate the statutory retirement process before the 6th April 2011 deadline.
If you would like to discuss the impact of the government’s plans on your business please contact us at firstname.lastname@example.org.