The government have announced plans to remove the Default Retirement Age (“the DRA”) of 65. Consequently, Employers are going to have to be cautious in their approach to dismissing Employees by virtue of their age, but is it all bad news?
The law currently requires employers to notify their Employees of their impending retirement shortly before their 65th birthday, if it is intended that the employee should retire at that date. Employers must allow their employees the right to request that their retirement age be extended. Such requests are of course met with mixed response, but more often than not denied. This can lead to resentment, and in more serious cases, litigation.
The proposals recently announced include:
- The removal of the DRA from 1 October 2011 with no new notices of intended retirement issued after 6 April 2011; and
- The need for each retirement dismissal to be objectively justified.
As such, employment policies will have to be revised to ensure that they do not fall short of the proposed new legislation.
While many will at first see such proposals as a further obstacle to overcome in the increasingly tortuous world of HR, the government suggests that these measures will not only boost the nation’s economy, but lessen the current cost to Employers of complying with existing regulations and procedure.
Government forecasts suggest that UK employers are set to save £45 million in the first year of implementation. The government also suggests that between 200 and 400 Employment Tribunal cases will be avoided, a view which is not necessarily shared by all. The driving force behind the changes however is more likely the estimated £79 million in tax revenues in the first year alone with older employees staying on and £132 million extra each year after the first 10 years.
So should the UK Employer be worried? The changes are likely to cause a few headaches but like most areas of Employment law, to be fore-warned is to be fore-armed. The implementation of a clear and concise procedure along with an objective reasoning for any prescribed retirement age should avoid future dispute. The Employer must show that the imposed retirement age is proportionate and only implemented in order to achieve a legitimate business aim.
If you are currently considering retiring an employee, or require a professional team of advisors to consider the procedures that you currently have in place, please do not hesitate to contact Stephen Nixon, Andrew Pointon or David Evans of Enoch Evans LLP.
<< Back to Newsdesk
|
