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What Does the Change in the Default Retirement Age Mean?

By: Kevin Watson MSc - Updated: 22 Mar 2017 | comments*Discuss
 
Default Retirement Age State Pension Dra

The default retirement age (DRA) ceases on 30 September 2011. From 1 October 2011, an employer cannot retire an employee simply because he or she has reached 65 years of age.

Retirement at 65

Currently, the DRA is 65 and an employer who intends to retire an employee under the DRA must give six months’ notice. The last day on which a UK employee can therefore receive a DRA retirement notice is six months prior to 30 September 2011. In other words, the last day for a DRA notice was 30 March 2011.

What Happens From 1 October 2011?

From 1 October 2011, employees aged 65 and over can continue working. Employers can only retire a member of staff if they can objectively justify such a move.

Objective Justification

Some employers may wish to set a retirement age. Commentators refer to this as the employer justified retirement age (EJRA). An employer must be able to justify an EJRA objectively. An EJRA should be:

  • Part of a genuine business aim, such as the need to give younger employees better chances for promotion
  • Necessary for Health And Safety
  • Reasonable
  • Part of an overall company policy

Case law and examples of EJRA are likely to develop over time.

Discrimination Against an Employee

Employers must not discriminate against an employee because of age. This is nothing new. The abolition of the default retirement age, however, brings the issue into greater focus. From 1 October 2011, any attempt to dismiss a worker simply because he or she is over 65 is illegal.

What is the Impact of the Change on the State Pension?

The DRA change does not have any impact on the state pension age. Nor does it affect payment of the state pension.

The state pension age for women rises to 65 from April 2016 to November 2018. From December 2018, for men and women, it will rise in increments to 66 by April 2020. The regulations that govern these increases are separate to those of DRA.

Apart from age, the DRA change does not affect any state pension entitlements.

When Can an Employee Retire?

Once the DRA has gone, an employee retires when he or she wants to. Compulsory retirement applies only if an employer can justify it objectively.

This means that an employee can choose when to give up work. This does not mean, however, that older employees are immune from normal disciplinary procedures and performance reviews.

The usual tools by which an organisation judges an employee’s suitability for a job remain. Any actions that lead to an employee’s dismissal must not be part of a covert retirement policy. Furthermore, an employer must not criticise an employee’s work for reasons of age.

Contractual Retirement Ages

Employers can ask employees to sign contracts that state the age at which workers must retire. Both employers and employees should note, however, that such contractual arrangements have no relevance in law. A contract cannot override workers’ employment rights.

Affected Employers

The removal of the default retirement age affects all employers without exception. It does not matter what an organisation does or how small or big it is.

Affected Employees

Similarly, the DRA change applies to all employees. Such employees may work in the private, public or not-for-profit sectors. The law makes no distinction.

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