Weekly Employment Update - 28th September 2011

Removal of the default retirement age

Welcome to Ashfords' Weekly Employment Update, where each week we consider recent developments in Employment and HR issues. This week, we consider the implications of the removal of the default retirement age, effective on the 1 October 2011. 

The Government confirmed last year that the default retirement age of 65 would be abolished from 1 October 2011. The first stage of the new regime was that employers must have notified an employee of their retirement date by 6 April 2011. The second stage is that any compulsory retirement an employer wishes to make must take effect  by 1 October 2011.

Following 1 October 2011, to terminate employment by compulsory retirement at a particular age an employer will need to be able to objectively justify the retirement of the employee and follow a fair procedure, which is likely to require proper consideration of any request from the employee to continue working. Any termination will otherwise be unlawful age discrimination and unfair dismissal.

The removal of a default retirement age will no doubt cause difficulties for employers, for example, in respect of workforce planning or managing an employee who refuses to retire even though they are no longer delivering as required. An employer may therefore wish to maintain a retirement age in its organisation; however, the concept of "objective justification" is currently uncertain.

A recent case in the European Court of Justice ("ECJ") was hoped to provide some clarity for employers. The ECJ considered the justification of a German retirement law - however, the applicability of the judgement must be regarded with caution. The ECJ held that establishing an age structure that balances young and older civil servants in order to encourage recruitment and prevent possible disputes concerning fitness to work could be a legitimate aim. However, governments of member states have the benefit of a "margin of appreciation" when implementing EU discrimination laws (such as a law permitting forced retirement). This means that employers may have to wait for the Supreme Court to consider the issue of "objective justification" in the anticipated case of Seldon v Clarkson, Wright & Jakes early next year.  We will report on the implications of this judgment when it is available.

Fuchs v Land Hessen (C-159/10 and C-160/10)

Ashfords LLP is regulated by the Solicitors Regulation Authority.  The information in this note is intended to be general information about English law only and not comprehensive.  It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.