Abolition of the default retirement age

Until 6 April 2011, a statutory retirement procedure was in force, allowing an employer to force the retirement of employees aged 65 or over. The legislation also provided for a default retirement age of 65. Both the statutory retirement procedure and the default retirement age were abolished on 6 April 2011 and employers are no longer allowed to force employees to retire at 65 or at any other age as a way of avoiding compulsory redundancies, unless there is a contractual retirement age in place that can be objectively justified as a proportionate means of achieving a legitimate aim. For more information see LRD’s annual employment law guide Law at Work.

This means that employees aged 65 or over must now be included in the pool of employees at risk of redundancy. It is important to ensure that selection criteria and assessment methods are not age discriminatory, either overtly or by concealing subconscious bias, or stereotypical assumptions, for example ideas that older workers are more resistant to change, or more likely to take large amounts of time off.

Compensation awards for age-based discrimination claims can be substantial through a combination of factors such as long service, difficulties finding a new job and the likelihood that the member was made redundant at their highest earning point.

One practical consequence of the abolition of the default retirement age may be greater use of formal appraisal processes in the years approaching retirement, and increased documenting by employers of “performance management” issues to provide ammunition to resist a claim for age discrimination. Reps should be on their guard for these and other age discriminatory practices. In a more positive development, some unions have been able to negotiate phased retirement policies for members.

Statutory redundancy pay remains capped at 20 years’ maximum service. Information on statutory redundancy pay and age discrimination can be found in Chapter 7.