To retire or not to retire? February 2011

That is the big question. The Government as many of you will know has confirmed its intention to abolish the Default Retirement Age (DRA) of 65; this is despite the negative responses received during the consultation period.

Whilst, these changes do not prevent you from retiring someone, they do mean that any retirement must be justified under the Equality Act 2010. Employers will no longer be able to regard 65 as the safe age at which to retire but will instead have to show objective justification for dismissing at this age or indeed any set age for retirement.  Whether employers actually keep retirement ages or decide when to retire people on a case by case basis, they will have to justify the decision to retire.  This will be the biggest question for many employers to consider. 

Since this announcement we now have a little more guidance, as the draft regulations have now been made available and you can read these at

http://www.incomesdata.co.uk/areas-of-expertise/employment-law/downloads/draregs.pdf 

The provisions that make a dismissal fair at the age of 65 will be abolished from 6 April 2011. The transitional arrangements will then apply. 

To date, the government has referred to the fact that the DRA will be "phased out" from 6 April 2011 and abolished on 1 October 2011. However, the concept of a six-month transitional provision appears to have been abandoned, as suggested by a statement issued by ACAS on 14 February 2011.  The key point to note from ACAS’s statement is that the last date for retirement dismissals to take effect under the DRA is 4 April 2012, according to ACAS, not 1 October 2011, as previously stated.  This is misleading.

It is not ideal that there is still no clarity on how the transitional arrangements for the abolition of the DRA are going to work, with only a few weeks to go before regulations come into force. Until we have final regulations, there will be a lack of confidence about how the transitional provisions are going to work.

However, one element that may be welcomed by many employers is regulation 2, which provides that it is not an age contravention to provide insurance benefits to the under 65s but not the over 65s.

At our next update on 22 March 2011 at The Gateway Centre (Derbyshire County Cricket Ground) hopefully we will be able to clarify a number of these anomalies and give you some more detailed guidance on the age old question of whether to retire.

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