Retirement rights

There is often confusion about the rights to continue in employment after 65 or after reaching the employer’s normal retirement age (NRA).

The Age Discrimination Regulations 2006 introduced a default retirement age of 65 for both men and women but employees have the right to request that they continue working after their 65th birthday, although the employer is within its rights to refuse.

An employer can refuse to hire someone over 65 or over the employer’s NRA, whichever is higher, without giving reasons. It can also refuse to consider a job application from a person who is six months away from their 65th birthday or the employer’s NRA of 65 or over. The person in question has no legal right to challenge the decision.

If an employer dismisses an employee or tries to force her to retire before she reaches 65 that person could make a claim for age discrimination and (if they were dismissed) for unfair dismissal. Employers could argue that the dismissal was justified but this is risky as ‘justification’ is successful only rarely. But once a person reaches 65, or NRA over 65, an employee can be dismissed and – so long as the employer followed correct procedure - the law will deem that dismissal fair and not age discrimination.

Some organisations have an NRA below 65 and employees are often happy to retire earlier as benefits and pensions are usually geared towards this. Should an employer retire an employee below 65, the dismissal is likely to be fair if the correct procedure has been followed and the normal retirement age is justified. However, imposing a normal retirement age below 65 might be difficult for the employer to justify.

The Government is reviewing the default retirement age due to a legal challenge brought by Age Concern. Although at the time the default age was introduced the court held that it was a ‘proportionate means of achieving a legitimate aim’, (maintaining confidence in the labour market) the court questioned whether 65 was an appropriate age for today’s workforce to ‘down tools’.

On 29 July 2010 the Government published a consultation document setting out proposals to phase out the default retirement age of 65 and the statutory retirement procedures. It proposes to abolish the default retirement age on 1 October 2011, with transitional arrangements beginning on 6 April 2011. Employers giving notice of retirement after 6 April 2011 will no longer be able to rely on the default retirement age.

Until then employers can require employees to retire at 65 and where correct procedure is followed the retiring employee will not be able to make a claim for age discrimination or unfair dismissal.

If you are unsure as to your rights, either as an employer or an employee, contact Reggie Lloyd at Birkett Long LLP on 01206 217347 or visit www.birkettlong.co.uk