Date 28 March 2011
The Default Retirement Age (“DRA”) introduced in 2006 is to be abolished on 1 October 2011.
Draft Regulations to advise on the new procedure for retiring employees was issued and immediately revised on 3 March 2011 due to a drafting error.
The updated regulations are awaited and are anticipated to be in force by 5 April 2011.
Below are some frequently asked questions regarding the amendments:-
Q: How can you lawfully retire employees bearing in mind the forthcoming abolition of the DRA?
A: Employees can be lawfully retired under the transitional provisions between April and October 2011, provided that:
(a) the employer’s notice of intention to retire the employee is issued on or before 5 April 2011
(b) the employee is, or will be, 65 by 30 September 2011.
Q: What procedure should be followed if notice to retire is issued on or before 5 April 2011?
A: The current statutory procedure for retirement will still apply during the transitional period, and should be followed, where notice is issued on or prior to 5 April 2011. This will require the employer to notify the employee of the intended date of retirement, consider any request by the employee to work beyond this date by holding a meeting, and allowing a right of appeal to any decision not to extend employment beyond the intended date of retirement.
Q: What happens if the employee requests to work beyond the intended date of retirement, which will take their employment beyond 1 October 2011?
A: As outlined above, the employer will still have a duty to consider an employee’s request to work beyond the intended date of retirement.
An employee should issue any request to work beyond the intended date of retirement between 3-6 months before the intended date of retirement. For example, if notice is given to an employee on 5 April 2011 that their intended date of retirement is to be 5 April 2012, the last date upon which the employee could request to work beyond the intended date of retirement is 5 January 2012.
The employer can then consider whether they want to extend the employment. If the employer extends employment beyond the maximum extension period of 6 months, a fresh notice of retirement must be issued.
However, as this will then fall after the 5 April 2011, a notice can no longer be issued and any attempt to retire the employee more than 6 months later (in this example after 5 October 2012) will require objective justification by the employer, which will be difficult to establish.
Q: If I want to dismiss employees after 1 October 2012, and retirement will be difficult to justify, how should I do this?
A: There are other methods available to employers, including on the grounds of capability, or ill health. However, a fair procedure will need to be followed, and a fair reason established for the dismissal to avoid claims being made to the Employment Tribunal. A particular risk to be aware of is discrimination, for example discrimination on the grounds of age and/or disability.
Q: Do I need to amend my contracts of employment which refer to a contractual retirement age?
A: Any contractual retirement age can be retained by a business. However, after 1 October 2011 employers will need to be able to objectively justify any retirement age, by demonstrating, for example, a genuine business requirement for employees of a certain age to be retired. In practice, this will be difficult to achieve and it is likely that case-law through the Employment Tribunal will assist in establishing guidelines for what constitutes objective justification.
© SA LAW 2011
Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them. You are recommended to obtain specific advice in respect of individual cases.