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How will changes to the retirement law affect me?

How will changes to the retirement law affect me?

"Retirement should be a matter of choice rather than compulsion – people deserve the freedom to work for as long as they want and are able to do so . Older workers can play an incredibly important role in the workplace and it's high time we ended this outdated form of age discrimination ."
Employment relations minister – Edward Davey


Although the DRA will not be abolished until 1 October 2011, the transitional arrangements come into force from 6 April 2011. The scrapping of the DRA undoubtedly raises practical concerns for employers in managing issues such as succession planning and ongoing performance management.

So, how to manage during this time of change and after? Here is our guide.

You can no longer issue new notifications of retirement during the six-month transitional period from 6 April. However, those already begun before this date can continue to completion if:

  • Notification of retirement is issued prior to 6 April 2011
  • Date of retirement is before 1 October 2011
  • Requirements of statutory retirement procedure are met

So, ensure you issue any notifications of retirement you wish to be certain of before 6 April.

You will have two options for dealing with retirement in future.

You can still operate a compulsory retirement age, so long as you can objectively justify it. The examples most frequently given here are for the police force and air traffic control. This is called having an “employer-justified retirement ages” (EJRAs) and you must be able to show that it is a proportionate means of achieving a legitimate aim.

Otherwise, you must stop using the DRA, and objectively justify all future retirements on an individual basis, following the existing unfair dismissal rules and using one of these reasons: capability, conduct, redundancy, illegality or some other substantial reason.

You must think about how the timetable will affect your workforce now. Work out your staff's previous retirement dates to see more clearly how the proposals affect you. Ask yourself:

Do you wish to still have a company retirement age? On what grounds can you objectively justify this? It may be as well to consult your legal position on this.

How will you now recruit, promote, train, manage and dismiss older employees? Especially, how will you ensure one age group is not treated less fairly than another under your new procedures? How will you reassure your staff that they are managed and valued for their contribution to your organisation, regardless of their age?

How will you communicate these changes to your staff?

Do your staff handbook, contracts, company pension schemes, health and safety, disability or death in service benefits need to be amended?

Would part-time or flexible working reduce staff turnover costs by helping skilled older workers to carry on working? (Beware, however. Part-time or flexible working must be open to your entire staff group. Otherwise, offering it to only older workers would need to be objectively justified.)

In future, how will you avoid any semblance of undue pressure to leave on an employee who is approaching the former default retirement age?

Remember, the final countdown is as follows:

Until 5 April 2011 you can still issue notifications of retirement under the existing statutory retirement procedure

After 6 April 2011 y ou can no longer issue new notifications of retirement under the current statutory procedure

From 1 October 2011 all future retirements will have to be justified on fair dismissal grounds to avoid claims of age discrimination