The Default Retirement Age has long been a contentious issue. Charities and unions have pressured two governments to scrap the law, and last month they eventually succeeded.
Business owners need to be aware of the changes, and understand how they affect their practices.
What is the Default Retirement Age?
The Default Retirement Age is a provision of the Employment Equality (Age) Regulations 2006, introduced by the Labour government. It allows employers to end a contract of employment when the employee reaches the age of 65, without giving a reason or offering any redundancy payment.
The rule has long been the subject of controversy, with age concern groups and unions arguing that it is discriminatory. Although a 2009 legal challenge failed, the coalition government signalled their intention to scrap the law early on.
What has changed?
Last month, the government confirmed that the DRA will be phased out from 6 April. The move has received widespread support from charities and unions, although many business groups say it will increase the burden of compliance that they are forced to shoulder.
As a business owner, you will be required to comply with the changes. The law will be abolished gradually, but major changes will start from April. It is important that you understand those changes.
From 6 April, you will no longer be able to give notice that an employee is to be sacked under the DRA. In other words, if you want to dismiss a member of staff because of their age, you need to do it before 6 April.
Between 6 April and 1 October, compulsory retirement will only be legal if the individual was informed of their retirement before 6 April, and it was due to occur before 1 October. You are not permitted to bring forward a planned retirement if it had been scheduled for after 1 October.
After 1 October, mandatory retirement will be forbidden – apart from in the exceptional circumstances explained below.
What do I need to do now?
The 6 April deadline is very close. As an employer you need to make sure that your business is properly prepared for it.
If you have already given employees notice that they are to be dismissed under the DRA, and this dismissal is to occur before 1 October, then your current plans will be unaffected by the changes. But if you had intended to dismiss an employee under the DRA, you will need to handle the situation with even more care than would otherwise have been required.
If you wish to dismiss an employee under the DRA, you must ensure that they receive notice of their dismissal before 6 April. You should be careful, though, as notices delivered during this period are likely to be treated even less favourably by staff than those received before news that the law was to be scrapped. The worst outcome would be for the rest of your workforce to feel that you are rushing to sack employees before the law changes.
Are there any exceptions?
Although the Default Retirement Age is being scrapped, the concept of mandatory retirement will live on. Employers will still be able to force workers to retire when they can objectively prove that the individual can no longer carry out their job properly because of their age. BIS gives specific examples of professions in which this might be acceptable, which include police officers and air traffic controllers.