Summary and implications
If you want to retire an employee without running the risk of age discrimination claims, you now only have a few weeks to do so. The government has published a second version of the draft Regulations abolishing the default retirement age (DRA), and these will prevent employers giving new notices of retirement under the statutory procedure after 5 April 2011.
The Regulations will abolish the statutory provisions allowing employers to compulsorily retire employees at 65 or over without risk of adverse claims. Once these provisions are abolished, employers who wish to compulsorily retire employees will have the option of relying on an objectively-justified company retirement age, or, for a little while, the temporary transitional provisions.
The first draft of the Regulations caused consternation as it only allowed an employer to retire an employee who actually turned 65 between 6 April and 30 September 2011. This meant that it was not possible for an employer to rely on the statutory retirement procedure for an employee who retired after 5 April but was already 65 or over by that date. In the new draft the government has corrected that by making it clear that the transitional provisions leading up to the abolition of the default retirement age will apply to employees who are 65 or over by 30 September 2011.
So, how do you require someone to retire using the statutory provisions and default retirement age?
- You must give notice of compulsory retirement to qualifying employees by 5 April 2011
- You can only use this notice to retire employees who are 65 or over on 30 September 2011
- The notice must be between 6 and 12 months long. There is some debate about the last date on which the notice to retire can expire, and retirement must take effect. Some lawyers think the latest date is 4 April 2012. We think it is probably 5 April 2012, but you might as well use 4 April 2012 as the latest date for retirement if you can.
Employees can request to work beyond the notified retirement date but only if the request is made in accordance with the statutory provisions and before 5 January 2012. If you permit an extension of no more than six months, you will still be able to rely on the DRA and statutory provisions. If you permit an extension of more than six months, you will not be able to rely on the DRA provisions and will run the risk of age discrimination claims unless you can objectively justify the compulsory retirement.
So, what's the latest that you can retire an employee using the DRA if you allow them to postpone their retirement date?
- The latest date you can retire someone is 4 or 5 April 2012, if you give them a year's notice of retirement on 5 April 2011
- The employee must make a request by 5 January 2012 to postpone the retirement date
- If you allow the employee to postpone, it must be for no more than six months. There is some debate about the last date the postponed retirement can occur. The three possible dates are 3, 5 and 5 October 2012. We think it is probably 5 October 2012 but you might as well use 3 October 2012 as the latest date for retirement if you can.