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65 and out to be scrapped

28/07/2010

The coalition government announced this morning that it plans to scrap the default retirement age of 65 in the UK from October 2011.

Given that an employer must give six months' notice before forcing someone to retire on the grounds of age, it means the changes could be applicable from 6 April next year – after this date no new forced retirement notices can be issued.

Currently the Employment Equality (Age) Regulations 2006 permit an employer to force an employee to retire at the age of 65 without having to pay any financial compensation. The only obligation upon the employer is to follow a compliant procedure, involving addressing the issue with the employee at least six months prior to the retirement date.

The issue of retirement was a particularly hot topic during the recent general elections. The Conservative Party initially maintained in its manifesto that they would increase the default retirement age to 66, whereas the Liberal Democrats wanted to scrap the default retirement age altogether.

“Having a default retirement age helps staff begin the process of deciding when it is right to retire, and helps firms plan ahead with more confidence” says John Hassells, Employment Law Partner at Bolton based solicitors, KBL.

“Currently an employer can force employees to retire at 65 without the need to justify it. This announcement means employers can still force an employee to retire at 65 (or older) as long as they can show they have good reasons. Employees are more likely to challenge future forced retirements and this is only going to result in increased costs and claims for employers”.

Many businesses will this morning be asking “what now?” – we shall return to you later with our further thoughts on the change