Regulations Abolishing Default Retirement Age Finalised
Author: Bethan Carney
Firm: Lewis Silkin LLP
The Regulations phasing out the default retirement age (DRA) – the UK law that allows employees to be retired compulsorily at or over the age of 65 – have been finalised and put before Parliament.
In essence, the new Regulations remove the exceptions that currently say it is not age discrimination to retire someone and that retirement in itself is a potentially fair reason for dismissal. However, there are some intricate transitional provisions (explained below).
The Regulations (coming into force on 6 April 2011) will delete the statutory provisions which currently say that it is not age discrimination:
- to dismiss someone at or over age 65 if the reason is retirement; or
- to refuse to offer someone employment who will reach retirement age within six months’ time.
The Regulations will also delete provisions saying that retirement is a fair reason for dismissal and setting out the employer’s duty to inform an employee of its intention to retire him or her and the duty to consider requests to stay on.
Once the DRA has gone, it will be unlawful age discrimination for employers to require an employee to retire at any age, unless this is objectively justified. It may also amount to an unfair dismissal, unless the employer can establish a valid ground such as poor performance or redundancy and show that its decision was reasonable in all the circumstances.
For further details, see Lewis Silkin’s guide (PDF) to working without the DRA.
The Regulations are subject to transitional arrangements that will allow retirements to take place on or after 6 April 2011 in certain circumstances. In order for the transitional provisions to apply:
- the employee must reach 65 (or the employer’s normal retirement age if later) by 30 September 2011; and
- the employer must give notice of retirement to the employee under the DRA notification procedures on or before 5 April 2011.
Note that the employee’s right to request an extension will still apply. The Regulations provide that if an employee makes a request to stay on beyond retirement, an extension of up to six months can be added to the retirement date notified under the transitional provisions. (An extension of any longer than this would mean that the retirement would fall outside the transitional provisions – making it unlawful unless justified.)
The upshot is that the long-stop date for retirements under the transitional provisions will be 5 October 2012 – i.e., six months after the twelve-month notice of retirement that must be given by 5 April 2011 at the latest. This is a change from the Government’s initial position, which was that all retirements under the old procedure would end by October 2011.
The Data Privacy Regulations contain a significant new exemption from age discrimination law in relation to insured benefits. It will not be unlawful to provide access to “insurance or a related financial service” only to employees aged under 65 (or State Pension Age, if greater). While the State Pension Age is still 65, the exemption itself only applies to:
- ceasing benefits at 65; or
- restricting benefits to the under-65s.
This does not expressly cover a situation where, for example, an employer already provides a benefit up to age 70. In that situation, a 71-year-old could potentially bring a claim comparing herself to a 69-year-old. This would not be covered by the exemption, so the employer would have to justify the difference in treatment in the normal way.
This may be an issue for employers who have extended cover for employees they have allowed to stay on under the duty to consider procedure.
Also, the exemption is restricted to the insurance/service being provided pursuant to an arrangement between the employer and a third party – the classic insured benefit situation. (There is a specific provision for employers who are in the insurance business, where they can provide their own product.) This means the exemption will not necessarily cover employers who self insure.
The draft Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 had not been formally published at the time of writing, but will be available shortly on legislation.gov.uk.