What does it mean to my business?

The Government has announced plans to phase out the compulsory retirement age. Currently, you can make your employees retire at the age of 65, provided that you follow the statutory retirement procedure. However, from 6 April, 2011, this default retirement age will begin to be phased out until 1 October 2011, when it will stop entirely.

What are the implications?

During the transitional period, (6 April, 2011 to 30 September, 2011), you won’t be able to retire an employee under the current statutory procedure. If you are part way through retiring someone during this period, you can complete the process, as long as:

• You meet the statutory retirement procedure requirements.
• The date of retirement falls before 1 October 2011.
• You issue a notification of retirement before 6 April 2011.

You will still be able to operate a compulsory retirement age, but only if you can objectively justify it by showing that it is a proportionate means of achieving a legitimate aim. Once the statutory retirement procedure has been abolished on 1 October, you will have to follow a fair procedure under the ordinary unfair dismissal rules and rely on one of the potentially fair reasons for dismissal of the Employment Rights Act 1996:

• Illegality.
• Redundancy.
• Conduct.
• Capability.
• Some other substantial reason.

You don’t need to do anything right now, other than prepare for the changes coming in next year.