The Default Retirement Age (Again)

8 April 2011

If there are any employers out there considering thinking about serving notice of retirement on any of their employees before the default retirement age of 65 ceases to apply then they are now too late.

Unless a notice was served no later than 5 April any retirement will now have to be handled without the benefit of the default retirement age and its twin benefits of, effectively, an automatically fair dismissal and immunity from an age discrimination claim. From now on “retirement” will no longer even be a potentially fair reason for dismissal so any employer wishing to manage out its older employees will usually have to rely on “capability” or, the employment lawyer’s favourite, “some other substantial reason” as the potentially fair reason for dismissal. Some of you may be thinking that redundancies are a possibility which, in theory, they are, but tribunals will be very, very suspicious of them so the employer had better be sure that they can prove there is a genuine redundancy situation, that selection for redundancy is carried out according to objective criteria which are not tainted by age discrimination and that the criteria for selection are fairly applied.

In the new world an employer can still set a retirement age but it will have to be objectively justified. As we all age at different rates it is hard to see how, other than in exceptional situations, employers will be able to justify any specific retirement age. I am sure some will try and I am very much looking forward to the test cases.

Most employers will probably choose to manage employees on an individual basis. Although this will usually mean relying on either capability or some other substantial reason to justify individual dismissals, and in many cases going through a careful procedure, I am not convinced that that employers should greatly regret not having served their notices of retirement by 5 April. We are all going to have to get used to a largely retirement age free landscape and we may as well do so sooner rather than later. It is not clear that risking alienating the workforce by serving notices of retirement on older employees now is the right thing to do: it is not helpful in terms of employee engagement, nor is it clear that the benefit of avoiding legal risk in the short term is worth the increased risk in future age discrimination proceedings arising from having acted in an obviously discriminatory (though at the time lawful) way.

It is worth looking at the ACAS guidance which recommends regular meetings with employees to discuss their future and aspirations. No doubt some of these meeting will turn out badly with employees claiming constructive dismissal on the basis that, in effect, their employer said it no longer wished to employ them but, particularly as time goes by and employers get better at these conversations, in many more cases employers and employees will reach a consensus about the right time for the employee to retire without going through a formal procedure.

Maybe, unusually for a lawyer, I am being too optimistic, but I really do not think the future will be as bad as some people fear or, if it is, it will be because of some as yet unpublished proposal, not the abandonment of the default retirement age.

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