The draft regulations on the abolition of the default retirement age have been laid before Parliament. The new law, which makes it unlawful to dismiss an employee on the grounds of age (ie retirement) unless it can be objectively justified, will come into effect from 6 April 2011 subject to transitional provisions. As drafted, the last date for giving notice of dismissal to an employee under the current statutory retirement procedure is 5 April 2011. While most of the content of the draft regulations is as expected, there are a few points to note:
- The concept of a six month transitional period appears to have been abandoned in favour of an ability for employers to retire employees under the current procedures (provided certain conditions are met) by giving 6 to 12 months’ notice on or before 5 April 2011.
- Employees can only be retired under the current regime if they are or will reach 65 or (if higher) the relevant normal retirement age before 1 October 2011.
- The last date on which an employee will be allowed to exercise his/her right to request to work beyond retirement will be 5 January 2012. In theory, an employer could agree a fixed or indefinite period of working beyond retirement. However, if it agrees an extension of more than six months, it will have to issue a fresh notice of intention to retire which it cannot do under the current regime after 5 April 2011.
- As anticipated, the draft legislation contains an exemption which will allow employers to withdraw group risk insured benefits (eg health insurance, life assurance, death in service, income protection) for employees at or over 65. This age will increase in line with increases to the state pension age. However, as drafted, the exemption may not apply to self-insured benefits (as opposed to those provided under an arrangement between the employer and a third party insurer).