Furley Page Blog

Abolition of Default Retirement Age

By Melissa Edmond - 02/08/2010 12:03 PM
Categories: Employment Law

The Government announced on 29 July 2010 that it proposes to remove the Default Retirement Age (DRA) from 6 April 2011.

The Employment Equality (Age) Regulations came into force on 1 October 2006 to prohibit discrimination in employment on the grounds of age and included the introduction of a national DRA of 65 and the prohibiting of compulsory retirement below 65 unless objectively justified.

The Government’s reasoning for the abolition of the DRA next year is demographic change and the economic and other benefits of extending working lives. People are living longer and healthier lives, and increasing numbers want to stay in the workforce beyond the age of 65. Fair enough, but why not raise the DRA instead of abolishing it? Without a DRA employers will risk unfair dismissal and age discrimination claims for forcing workers to retire. Workforce planning will be difficult and job-blocking by the more mature members of staff may become a problem. Employers may also find themselves tempted to withdraw or reduce benefits to staff across the workplace for fear of the additional cost of providing them to the over-65s.

In the words of the Confederation of British Industry’s Deputy Director General, John Cridland: “Scrapping the DRA will leave a vacuum, and raise a large number of complex legal and employment questions which the government has not yet addressed”.

Taking a more positive view was Employment Relations Minister, Edward Davey who described the abolition of the DRA as “good news for those who want to retire later, good news for their employers because older people have got such a lot to contribute, and good news for the wider economy”. Michelle Mitchell, Age UK Charity Director stated: “Everybody stands to win from scrapping forced retirement”. A nice thought, but I fail to see how the talented and entrepreneurial young ‘win’ by abolishing the DRA when they are already banging their heads against the closed doors of the labour market.

Employers have two choices:

Stop using retirement ages, though employers can complete any retirements where the employee has been notified before 6 April, 2011 and where the retirement will be complete before 1 October 2011; or
Continue using a retirement age. However, when the DRA is removed, employers using retirement ages are likely to be challenged and will have to satisfy a Tribunal that their retirement age is objectively justified, which will not be easy to demonstrate.

For further information, contact Melissa Edmond, Employment Law Solicitor on 01227 763939.

Areas of specialism Employment Law Career Following a History degree at University College London (UCL), Melissa completed both the Postgraduate Diploma in Law and the Legal Practice C... more »

Comments (4)

A Holden (25/08/2010 09:36 AM)

Dear Mr Hawkes

As a client of the partnership who is over the current default retirement age, I was shocked to see the item in the local press which reported the view of one of your junior partners, Melissa Edmond, that the Government policy to abolish the default retirement age was a mistake. She apparently takes the view that people of 65 and over should quietly fade away and make room for younger people in the employment market. I was even more surprised to see these views given some prominence in the news section of the Furley Page website. Could you please tell me if this is merely the expression of a personal view by a young and inexperienced lawyer, or if it represents the formal view of the practice as a whole? If the latter is the case, how can you properly represent the best interests of all your older clients? Am I, as a person over 65, still valued as a client?

The views expressed by Miss Edmond, although unfortunately not unique, show a fundamental misunderstanding of economics. The number of jobs in the economy is not fixed, but is a factor of the total level of economic activity. Thus there is no direct correlation between a retirement at one end of the jobs market and the availability of a job for a newly qualified person at the other. Someone retiring does not guarantee that a job will become available elsewhere for another person. Alternately, an older person remaining in employment does not automatically restrict the employment opportunities of younger people; the converse is more likely, in that the older person remaining in work creates greater economic activity which enhances job opportunities elsewhere in the jobs market.

The existing retirement ages were established at a time when life expectancy was much lower than now applies. A relatively few people actually survived retirement age by any significant length of time. The situation now is very different. It is predicted that without any change in retirement age, there will in future be one retired person for every two people in employment - a situation which is economically difficult to sustain. The only way to avoid an unsustainable financial situation is for older people to be allowed and encouraged to remain in employment, and hence contributing to the financial well-being of the country The abolition of the default retirement age was the policy of the previous Government, and is being accelerated by the new Government

I look forward to learning your own views on this matter.

P Hawkes (25/08/2010 09:43 AM)

Dear Mr Holden

Thank you for your comments. This subject inevitably polarises views, and our Employment Team has identified retirement age as a major area of debate for employers and employees over the coming years. Melissa, as one of our younger employment lawyers, is putting forward one view which will inevitably be held by those at the younger end of the workforce. We welcome any debate which highlights the contrary case, which undoubtedly exists.

Subject to your agreement, I would be more than happy to post your comments on our website blog to help stimulate the debate further.

As for the position of the firm as a whole, as solicitors we will vigorously represent and defend the interests of each of our clients regardless of age. Indeed, we have many solicitors here who are particularly focused on the affairs of older people.

Meanwhile, as one of our more 'experienced' partners, I welcome the challenge from our bright young lawyers!

Kind regards

A Holden (25/08/2010 09:46 AM)

Dear Mr Hawkes

I would be very happy for you to include my email on your website, so that a contrary view would be seen. I note your comments about welcoming challenge from younger competitors. We are all happy to compete on merit based on our experience and skills. Your view might be different if you were told the playing field was no longer even and you were rule out of the competition merely on the grounds of age.

I am interested to know what you perceive as the audience for Melissa's comments. I would have thought it most likely to find resonance with the more reactionary of employers.

You should also not interpret the affairs of older people as being inheritance and powers of attorney! Older people have the same issues as the rest of the community - they are not a group apart.

Regards

P Hawkes (25/08/2010 09:56 AM)

Dear Mr Holden

In terms of audience, the debate concerning retirement age has an importance for virtually everyone in society but these comments will have been raised in the context of the role of our Employment Team. We have one of the largest and highly rated Employment Team of lawyers in Kent, which is working with employers of all sizes on many issues including age discrimination (at both ends of the age spectrum), in particular how to maintain a balanced workforce. This involves having a process which recognises the value of older workers whilst ensuring performance is monitored and the business has sensible succession planning. Achieving the level playing field to which you refer requires careful handling.

Point taken about affairs of older people - I just wish we could persuade more younger people to make a will !

We will meanwhile add your comments to our website blog. Thank you for taking the time and trouble to raise these important issues.

Regards

Add a comment:

Note: Comment moderation is enabled. Your comment will not appear until approved.

Enter your email address to subscribe to this blog.

Archives By Date

Archives By Subject