Businesses told to prepare for new retirement rules

Posted on Monday February 18, 2013

Employment experts at London-based law firm Mackrell Turner Garrett are warning employers and employees about new retirement rules set to be implemented from October 1.

As of 1 October there will be no statutory retirement procedure and employers will have to objectively justify the retirement of any employee, at any age, and follow a fair procedure.

This is following the withdrawal of the Default Retirement Age (DRA), which was phased out on 6 April.

According to Donna Martin, employment specialist at MTG, any ‘retirement’ dismissal will now have to be justified under the Equality Act 2010.

She said: “Employers need to be made aware that if justification is not possible, then the dismissal will be deemed unfair and will be discriminatory.”

Employers now have two options – to stop retiring employees and use other dismissal options, or enforce an objectively justifiable compulsory retirement age, known as a Employer Justified Retirement Age (EJRA).

“In order to justify why a compulsory retirement age is necessary, employers will have to show that a legitimate aim is being met, having a particular retirement age meets that aim and it is proportionate to use that retirement age as a means of meeting that aim,” she said.

“It will not be sufficient to simply satisfy the above, a fair procedure will also need to be adhered to in order to ensure that the dismissal is fair.”

Regardless of whether they will be keeping an EJRA, Donna believes employers should carry out a number of reviews.

This includes reviewing any retirement notices which are due to expire, reviewing contractual and share option documents to see how these interact with the abolition of the DRA and reviewing or strengthening performance management training and processes to ensure that capability issues are dealt with swiftly and effectively and are applied across the workforce – regardless of age.

“With 7.3 million people in the UK aged between 55 and 64 and rapidly approaching retirement age, employers and employees should carefully take note of the new rules,” warned Donna.

“Employees do not want to be left illegally on the scrap-heap, and employers must negate the potentially costly impact of unfair dismissals.”