29.07.10

Default Retirement Age to Go in 2011

Age campaign organisations have welcomed the Coalition Government’s announcement that the Default Retirement Age (DRA) will be scrapped from October 2011.

The change will mean that employers will no longer be able to dismiss workers simply because they reach the age of 65, unless they can objectively justify doing so.

Explaining the rationale for its abolition. Employment Relations minister Ed Davey said:

“With more and more people wanting to extend their working lives, we should not stop them just because they have reached a particular age.

‘”We want to give individuals greater choice and are moving swiftly to end discrimination of this kind.

“‘Older workers bring with them a wealth of talent and experience as employees and entrepreneurs. They have a vital contribution to make to our economic recovery and long-term prosperity.

‘”We are committed to ensuring employers are given help and support in adapting to the change in regulations.”

The DRA was introduced as part of the Equal Employment (Age) Regulations in October 2006.  Although the Regulations sought to tackle age discrimination in employment and vocational training, the introduction of the DRA meant that employers could lawfully dismiss employees when they reached the age of 65 provided they followed the correct procedure.

The introduction of the DRA led a large number of employers who had previously had no fixed retirement age to establish one. 

Age Concern (now Age UK) challenged the legality of the DRA in the courts. The case was referred by the High Court to the European Court of Justice, who referred it back to the High Court in London for a final decision last year.  Although the case was lost, the judge commented that had the Government been currently trying to introduce the DRA,  it was doubtful whether it would have been judged to be lawful.

The Court was also influenced by the fact that a review of the DRA had already been planned.  The review was due to announce its recommendations by October 2011, but  the Government’s plan is now to  scrap it from that date.

Responding to the announcement, Chris Ball, TAEN’s Chief Executive, commented:

“We welcome the Government’s announcement and its decision to go for total abolition of the default retirement age, rather than raising it in line with any future increases in state pension age. The whole idea that employees could be dismissed simply on the basis of reaching their 65th birthday runs totally counter to the general principle of age equality.

“However, this move can only be a first step. Many employers will need to adopt a totally new mindset. They will need actively to plan and to assist workers to continue to contribute to the success of their organisations. This may mean adapting work practices and workplaces. It will certainly mean providing opportunities to train or re-train and to work more flexibly. Crucially they will need to recruit people in their 50s and 60s where they may not have done so in the past.”

Reaction from many employers’ organisations has been critical of the Government’s plans.

David Yeandle, EEF’s head of employment policy, said: ‘Many manufacturers will be seriously concerned about this change in policy which will make workforce planning more difficult.

“The proposed timetable gives employers virtually little or no time to alter their policies and practices before such an important change in employment legislation is introduced.

“There is also a real danger that it could open a Pandora’s box, with the onus being placed on employers to prove whether older employees are capable of continuing in their current role.

“Inevitably, this could lead to employment tribunal cases from some older employees.”