Retirement Age Challenge Fails

A High Court Judge has recently ruled that the Default Retirement Age (DRA) of 65 is lawful. This means that employers are still able to force employees to retire at 65.

The Law

The Employment Equality (Age) Regulations 2006 (“the Regulations”) came into force in 2006 outlawing age discrimination in employment. However, the Government restricted the protection available to people over the age of 65 by creating a new DRA of 65 for both men and women. This permits employers to set a 'mandatory retirement age' at or above the age of 65. It is lawful for an employer to force employees age 65 or over to retire as long as they follow the correct procedure, which includes giving the employee between six and twelve months notice of termination. Employees have the right to request to continue working beyond the date when the employer wants them to retire, but the employer can refuse the request and the law does not require them to give any reason for that decision.

The Heyday Challenge

Age UK launched a challenge to the DRA 3 years ago (known as the Heyday challenge). They argued that the introduction of any DRA was discriminatory on the grounds of age and the government’s reasoning in settling on a DRA of 65 could not be objectively justified.

In the recent ruling, the Court ruled that the DRA was lawful when it was first introduced, so the law will stay as it is. Crucially, however, the Judge also said that there is now a ‘compelling’ case for setting the age higher than 65.

Whilst the recent decision is good news for employers, particularly in the challenging times we currently face, the decision needs to be read in light of the Government’s announcement that it plans to bring forward a review of the DRA to next year.

Practical tips

Employers should take note that the current scheme may only be available for a limited time and it is highly likely that the DRA will be increased from 65 in the near future. With this in mind, our advice to employers would be to take the following steps as a matter of urgency:

• Arrange for your Employment Documentation to be reviewed. Ensure you have a comprehensive Retirement Policy in place and robust Contracts of Employment. Please contact us for a no-obligation quote.
• Review your current workforce and compile a list of staff who are at or near the DRA. Carry out detailed resource planning.
• Decide what action you wish to take with staff who are at or near the DRA. Remember you may not have the benefit of the current retirement scheme after next year and those staff you could dismiss under the retirement procedure now may well be protected in the near future.
• Take timely action as you must give between six and twelve months notice of retirement. As the Government is planning to review the scheme next year, we recommend you give this matter your urgent attention.

Yasmin Awan solicitor at Clarkson Wright & Jakes Ltd,yasmin.awan@cwj.co.uk direct telephone number 01689 887805.

This article is provided for general interest and is not intended to be a definitive analysis of legal and/or other changes. Seek professional advice before taking any course of action.