Employers should be aware that they will no longer be able to dismiss employees under compulsory retirement when they reach the age 65 later this year. The Default Retirement Age (DRA) is to be phased out from April 2011 and after the 1st October 2011, it will be unlawful to force employees to retire simply because they are 65.
The Government is hoping this will help reduce the ageing population and short-fall in pension savings.
From 6th April 2011, employers shall not be able to issue notifications to employees for compulsory retirement. The last day employees can be compulsorily retired using the Default Retirement Age will be 30 September 2011. This means that the last day to provide the six months' notice required under the current law will be 30 March 2011.
This move has been seen as favouring employees, who will have the freedom to work longer and choose their own retirement age. However, employers may also be able to benefit from the skills and experience of older employees.
It should be noted that employers can still fairly dismiss employees by adopting the proper process and having a fair reason.
Although there is no draft legislation yet, it would appear that employers may still be able to operate compulsory retirement ages, provided they can be justified under normal discrimination law principles.