The Default Retirement Age (DRA) is being abolished from 1 October 2011.

The Coalition Government recently announced that the statutory default retirement age of sixty five will be abolished on 1 October 2011.

Currently, employers can use the DRA to compulsorily retire workers when they reach the age of sixty five. From 1 October 2011, no employee can be compulsorily retired by an employer when they reach sixty five unless that retirement can be objectively justified. The last date upon which retirement notices can be issued using the DRA is 31 March 2011.

The proposed changes, which will be applicable to all employers and all company sizes and sectors will have far reaching implications for the way businesses work. Therefore, it is important to start to plan now, as organisations need to take a new approach to managing issues which previously may have had little or no legal risk. Employers who fail to make the necessary changes may face claims of unfair dismissal and discrimination.

The removal of the DRA raises practical issues for employers in managing older workers and also across the workforce more generally with a wide range of areas such as succession and workforce planning, performance management and ensuring consistency and fairness in policies and practices. There will also be implications for employees in terms of career expectations and advancement.

The Confederation of British Industries (CBI) has spoken against this proposal requesting for more clarity for businesses. They suggest that the impact on employers, especially smaller ones, will be considerable. They do not consider that enough time has been allocated for businesses to put in place new procedures. The British Chamber of Commerce (BCC) have also spoken against the idea. However, the Federation of Small Businesses (FSB) supports the Government’s proposal, stating that nearly 80 percent of their members do not currently use the DRA for their staff. The FSB however urged for a provision in the law to protect employers that need to retire staff because of ill health threatening their levels of performance.

What should employers do now?

Employers should review their policies, procedures and practices, in light of the changes.

They should consider removing the default retirement age/clause from contracts of employment, company handbooks etc.

Employers should also consider providing some training for Managers in handling workplace discussions which may be deemed discriminatory. It is important not to single out older workers and certainly good practice to also ask younger workers about their plans, perhaps as part of an annual appraisal meeting.

ACAS training courses are available for employers who would like to learn more about making necessary changes to their policies, procedures and practices. 

Further information:

The Equality Act:

http://www.acas.org.uk/index.aspx?articleid=3017

Department for Business Innovation and Skills (BIS) website:

http://www.bis.gov.uk/retirement-age

ACAS Age Discrimination:

http://www.acas.org.uk/index.aspx?articleid=1841

FSB website:

http://www.fsb.org.uk/News.aspx?loc=pressroom&rec=5822

ACAS    Advisory booklet - Working without the DRA Employer guidance [347kb], which outlines the changes and provides advice on how employers and employees can manage both the transition stages and new procedures.