On 30th July 2010, the Government announced that the default retirement age, which is 65, is to be phased out from 6th April 2011 and abolished completely from 1st October 2011, when the statutory retirement procedures will be removed.
The current situation is if an employer wishes to retire an employee who has attained the default retirement age of 65, an employer must give a minimum of 6 months notice, or a maximum of 12 months notice of retirement to those employees. The notice must give the employees the right to request to work beyond their retirement age, in which case there should be a meeting to discuss this request, together with the right of appeal in respect of the decision. If, following the appeal the ultimate decision is that an employee is to retire upon his or her attaining the age of 65 years, there is no need for the employer to give reasons for the decision. The reason for dismissal is retirement.
From 6th April 2011 it will no longer be possible for employers to retire employees with this procedure. Indeed there will be transitional arrangements for retirements that have been notified prior to 6th April 2011 and where the date of retirement occurs before 1st October 2011.
From 1st October 2011, subject to the transitional arrangements, if an employer wishes to dismiss or retire an older employee, this would involve following a fair procedure and relying on one of the established reasons for a potentially fair dismissal which are set out in the Employment Rights Act 1996, which are, conduct, capability, illegality, redundancy or some other substantial reason.
The Government has published a consultation document, explaining the proposals to phase out the default retirement age. Responses to the consultation are required by 21st October 2010.
If employers still wish to have a mandatory retirement age, they must now review their business to see whether there is a legitimate business requirement to have such a retirement age. It appears that any retirement age in existence after 6th April 2011 will have to be objectively justified, otherwise this may result in claims for unfair dismissal [http://www.employment-law.uk.com] and/or age discrimination. Remember there is no ceiling on the amount of compensation that can be awarded for discrimination claims.