The Government has announced that a review of the Default Retirement Age ("DRA") of 65, originally planned for 2011, will now take place next year.
One outcome of the review could be the abolition of the DRA which would mean that employers may have to objectively justify their decision to retire an employee, whatever their age. Another possible outcome is that the DRA could be increased from 65.
However, the Government has stated that any changes to the DRA would not be implemented until 2011 in order to give employers time to prepare.
The review of the DRA is part of the Government's plans to deal with the UK's ageing population as detailed in its consultation document 'building a society for all ages'. The consultation closes on 12 October 2009, and employers wishing to take part in the consultation can do so by accessing the consultation document at www.hmg.gov.uk.
In the introduction to its consultation document, the Government refers to the fact that in 2007, there were more people in the UK over the state pension age than there were children. The Government maintains that this "demographic tipping point" means that they must take action now to address the demands of an ageing population.
Although the DRA was always intended to be subject to a review, the Government originally intended this to take place in 2011. The Government now claims that the current economic climate means that an earlier review is needed.
The concept of the DRA was introduced by the Employment Equality (Age) Regulations 2006. Provided that an employer follows the correct procedure for notifying employees of their intended date of retirement and, if a request to work beyond the retirement age is received, to meet with the employee and consider their request (and any appeal), then any retirement of an employee at 65 will be regarded as fair. Accordingly, the employee cannot claim that they have been unfairly dismissed by reason of the compulsory retirement, nor can they claim it constitutes age discrimination. However, this is still subject to the ongoing Heyday challenge.