Business

Default retirement age of 65 to end. ministers confirm

  • 13 January 2011
  • From the section Business
Media captionEd Davey MP: "This will be great for older people, give them more choice, and be a boost to the economy"

The Default Retirement Age (DRA) is to be phased out this year, the government has confirmed.

It means employers will no longer be allowed to dismiss staff just because they have reached the age of 65.

The Department for Business said that as well as benefiting individuals, "the freedom to work for longer will provide a boost to the UK economy".

Employers had called for the changes to be delayed for a year to allow greater legal clarity over the plans.

The Employment Relations Minister Edward Davey told the BBC it would still be possible for employers to force people to retire if they were no longer up to the job.

"I think this [change] is really beneficial and should not be the problem some people suggest," he told the BBC.

"As of now, you are still able under the Employment Rights Act 1996 to fairly dismiss someone if you go though the proper processes - and one of the reasons you can dismiss someone fairly includes capability."

Justification

Presently, firms can use the DRA to make staff retire at 65.

Ditching the DRA was first proposed by the coalition government in July last year - largely to tackle issues around the ageing population and the shortfall in pension savings.

And it has now been confirmed following a consultation process.

The change means that from 6 April, bosses will not be able to issue any notifications for compulsory retirement using the DRA procedure.

Between 6 April and 1 October, only those people who were told before 6 April, and who are due to retire before 1 October, can be compulsorily retired using DRA.

Finally, after 1 October, employers will not be able to use DRA to force staff to retire.

However, individual employers will still be able to operate a compulsory retirement age "provided that they can objectively justify it".

The Department for Business gives two examples of where this might be the case - for air traffic controllers and police officers.

It added that it had worked with conciliation service Acas to provide comprehensive guidance for companies on the removal of DRA.

'Uncertainty'

Employer groups had called on the the government to delay introducing the change.

John Cridland, Director-General Designate of the CBI, said the government's new guidance was inadequate and did not deal with how firms could retire staff if they were no longer capable of doing their jobs properly.

"There is not enough clarity for employers on how to deal with difficult questions on performance," he said.

"Less than three months is not enough time for businesses to put in place new procedures.

"The outcome will be more unpleasant and costly legal action," he added.

Mr Davey told the BBC that such fears were exaggerated.

"Two thirds of firms at the moment do not operate a fixed retirement age," he said.

"The evidence that performance and effectiveness decline after 65 is just not there."

Unions have demanded "clear guidance" from both employers and workers to raise awareness of what protection from unfair dismissal and age discrimination older workers will have.

Your comments

Related Internet links

The BBC is not responsible for the content of external Internet sites