11 August 2009
65 not out?

The default retirement age ('DRA') of 65, which allows employers to terminate employment on the grounds of the employee's age when s/he reaches 65, is to be reviewed one year early after receiving widespread criticism from Government Ministers and various charities.

The DRA, which was introduced by The Employment Equality (Age) Regulations 2006, was not due to be reviewed until 2011. However, the Government recently announced in its strategy document 'Building a society for all ages' that this review will be brought forward by one year to 2010.

The original review was agreed in response to campaigns for the abolition of the DRA by various groups, including the National Council for Ageing ("Heyday"). It was expected that, following this review, the DRA would be abolished.

The announcement was particularly timely given that, during the same week, two age discrimination claims relating to the DRA were due to be heard. In one of the cases, brought against the UK Government by Heyday, the UK Government will have to provide evidence explaining why its social or employment policy objectives make a retirement age of 65 necessary. A full judgment is expected by the autumn and if this case is successful, the DRA is even more likely to be abolished.

Not everyone is in agreement though, with the main argument in favour of the DRA being that it affords employers certainty in terms of workplace planning/staffing and allows employers to plan ahead with more confidence.

Additionally, employers who have retired their staff in line with the DRA may be concerned about any changes that may result from the review. If the DRA is abolished and the law is changed retrospectively, this will open the floodgates enabling employees who have been forced to retire at the age of 65 over the last three years to potentially bring claims for unfair dismissal and age discrimination. This could prove very costly to employers.

John Macaulay, Director, Head of Employment and Employee Benefits at Greenwoods Solicitors LLP comments: "Whilst this debate rumbles on, one thing is certain - employers cannot currently take anything for granted when it comes to this issue and need to bear in mind the risks associated with compulsory retirement at 65 until such time as the position finally becomes clear. Whichever way things go, the outcome will have a profound impact on the way in which businesses deal with their employees for many years to come."

(The information contained in this article is intended to be a synopsis only. Before acting on it, you should take professional advice.)

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