Government confirms it will abolish the default retirement age of 65
Date online: 18/01/2011
The Government has confirmed that the Default Retirement Age (DRA) of 65 will be phased out from 6 April 2011, with complete abolition on 1 October 2011. The Government has worked with Acas to produce comprehensive guidance to help businesses adapt to the change.
As proposed in the consultation on the DRA's abolition, from 6 April 2011, employers will no longer be able to issue compulsory retirement notifications using the DRA procedure. Between 6 April and 1 October, only people who were notified before 6 April, and whose retirement date is before 1 October, can be compulsorily retired using the DRA. After 1 October, employers can no longer use the DRA to compulsorily retire employees. Employers will only be able to operate a compulsory retirement policy if it can be objectively justified.
As employers are required to give six months' notice of compulsory retirement, any notifications given after 30 March but before 6 April will be on a 'short notice' basis. While 'short notice' of at least two weeks is allowed under the current scheme, an employee may be able to claim compensation.
The Government has also stated that it will introduce an exception to the age discrimination rules so that employers can stop offering employees insured benefits, such as life assurance and private medical cover, beyond their normal retirement ages. Businesses had been concerned that the removal of the DRA could lead to substantial costs for providing insured benefits for the over 65s.
If you are an employer and are unsure about how this subject may affect your business, then please do not hesitate to contact us here at Molesworths by visiting our Business & Commercial pages or calling 01706 356 666
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.