The effect on employers
It has been confirmed this week by the Department of Business, Innovation and Skills that a consultation process will now begin to look at exactly how this will be phased out with an initial date proposed as early as April 2011.
Following the Coalition Government’s recent announcement earlier this year that they are looking to scrap the UK’s default retirement age (presently 65), we have taken this opportunity to speak with mhl support’s Employment Law Compliance Officer, Brendan Wincott, who has offered us his thoughts on what this latest consultation will mean for employers.
Brendan explained that “the proposals are set to see the default retirement age scrapped in April 2011. After this date, employers will no longer be in a position to retire staff members with the comfortable assurances that the default retirement age presently gives to employers.”
However, Brendan went on to add “whilst the default retirement age is likely to be scrapped, there is still nothing to prevent employees leaving employment of their own accord at 65, and as has always been the case, this will simply be a resignation. However, under proposals to increase state pension age to 66, I am sure we will soon see more workers staying on beyond 65 for financial reasons. However, even when the default retirement age of 65 is scrapped, there is nothing to prevent employers justifying their own internal mandatory retirement age.
We have seen cases where default retirement ages have been justified and the key to ensuring that they are is to carefully identify legitimate aims for having mandatory retirement ages and to ensure that these are a proportionate means to achieve those aims. Most retirement ages will be justified for reasons of succession planning, meaning that employees need to retire to make way for new employees joining the labour market.”
So, knowing that employers could still have retirement ages, we asked Brendan how easy it will be for employers to objectively justify these. Brendan explained that “case law confirms this can be done, and certainly the Court of Appeal’s recent decision in Seldon v Clarkson, Wright & Jakes adds weight to this. However, the latest consultation appears to propose a removal of the statutory retirement procedure and to retirement as one of the six potentially fair reasons for dismissal.
With this in mind, it seems a little puzzling how an employer could have a mandatory retirement age that is objectively justified, yet to exercise it would lead to a potential unfair dismissal claim. The employer naturally not being able to use retirement as their fair reason for dismissal leaves them having to defend any such dismissal under any of the other 5 reasons, namely capability, conduct, redundancy, illegality or some other substantial reason which will be difficult to achieve.”
Brendan further explained that “there will be transitional provisions which allow for retirement up until October 2011, but only where notification of a planned retirement age has been given before April 2011.”
Brendan’s concluding comment to us was that “this is only a consultation process at this stage, and therefore nothing is yet set in stone. However there is a good chance that the proposals may become law, so employers are urged to review their retirement plans soon and in any event before April 2011.”
If you want to learn more about the latest changes to the default retirement age and are an existing client, please call one of the team today on 08453 100 999 quoting your PCN number. If you are not already a client, but are interested in learning more about the services mhl provide or specifically about the default retirement age, please call Katy Vaughan today on 08453 100 600 for your free no obligation quote.
This News Release is intended to provide a general overview and discussion of the subject matter. It is not however, intended to give advice or to act as a substitute to taking legal advice from our Support Line in any specific situation. Mhl accepts no liability or responsibility for the information contained within this news release. If you would like specific advice about this subject matter, please contact one of the Employment Law Team today on 08453 100 999.
