Repeal of default retirement age – draft regulations published

Just four and a half years on from the commencement of the Employment Equality (Age) Regulations 2006, the coalition government has published draft regulations abolishing the default retirement age which those Regulations introduced.

Transitional Arrangements

Rumours and uncertainty have led to employers being uncertain as to how long they have left to lawfully carry out retirement dismissals under the statutory procedure laid down by the 2006 Regulations. The Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 published today, go some way to clearing up this uncertainty.

As a result of the repeal of the 2006 Regulations, to effect a retirement dismissal under the “vanishing” statutory retirement procedure:

•a notification of impending retirement (including where the employer wishes to give less than six months’ notice) must be issued by the employer on or before 5th April 2011
•the employee being retired must reach the age of 65, or the normal retirement age if higher, on or before 30th September 2011*
•the date of retirement must fall on 4th April 2012 at the latest**
•all requirements of the current statutory retirement procedure must have been met

dismissal happens on or after that normal retirement age. Note that a dismissal in these circumstances would have to be objectively justified.

**There is uncertainty as to whether this date is 4th or 5th April 2012, but for the moment our recommendation is that employers should comply with the first date.

Looking ahead: age and retirement after 6th April 2011

•Dismissals: Unless the procedure above was commenced prior to 6th April 2011, retirement will no longer be a statutory fair reason for dismissal. The “duty to consider” procedure, as contained in the 2006 Regulations, will no longer apply. Employers will have to objectively justify any dismissal which is for a reason related to age, which means proving that the dismissal was a proportionate means of achieving a legitimate aim.
•Contractual Documents: Employers will need to consider if, and on what basis, a contractual retirement age will be continued in employment contracts. Other agreements such as share schemes containing “Good/Bad Leaver” provisions (which often lean in favour of retiring employees) will need to be reviewed.
•Recruitment: It will no longer be lawful to deny recruitment opportunities to individuals on the basis that they are within 6 months of 65, or the normal retirement age if higher. Job applicants will have to be evaluated equally regardless of age, unless such difference in treatment can be objectively justified.
•Benefits: From 6 April 2011, it will not be an age contravention for employers to have a cut off for “insurance and related financial service” benefits for those employees who have reached the age of 65 or the state pensionable age (if higher). The government response to consultation provided that such benefits would include income protection schemes, death-in-service benefits and health insurance.

This article first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information about Law-Now, please go to www.law-now.com