Employment Law Update (October 2009)
Retirement at 65 legal – for now
The High Court has held that employers may lawfully retire
employees at age 65, but has indicated that a review of the law is
In a case brought by Age UK – the charity formed following the
merger of Age Concern and Help the Aged – the High Court was asked
to consider whether the "default" retirement age of 65, brought in
by the anti-age discrimination regulations in October 2006 was in
fact lawful. In ruling that it was, and is, lawful, the High Court
has brought certainty back to this area of law – for the time
The ruling follows an earlier clarification of European Union
(EU) law from the European Court of Justice, set out in our March
Compulsory Retirement age can be lawful,
rules European Court
However, the judgment also made it clear that the government
should urgently review the default retirement age, with a view to
increasing it, as changes in the labour market may mean 65 would
not be appropriate for much longer. The Government has already
announced a review of the retirement age, and a decision is
expected during 2010.
How does this impact my business?
For now, there is no change to the law. The "default" retirement
age of 65 will continue, which means employers may lawfully retire
staff at 65 provided that:
- The employer has given the employee between 6 and 12 months'
notice of retirement;
- The notice does not expire before the employee reaches age
- The notice sets out the employee's right to request not to
- The employer follows the correct procedure in considering any
request the employee makes not to retire.
What changes in the law are there likely to
The government has always made it clear that, in implementing
the age discrimination laws, it has to bear in mind the competing
claims of older employees - who might not want to be forced to
retire - and younger people, who might find work or career
development opportunities "blocked" by older workers. European
Union law allows the government to do look at factors such as this,
provided it can justify its actions on proper grounds.
In making its decision, the current recession will no doubt be a
consideration, as young people entering the labour market for the
first time are finding it increasingly difficult to find work, and
this will not be helped by an increase in the retirement age.
However, set against this are the increasing numbers of people
aged over 65, with corresponding demands by them for access to job
opportunities, as well as increases in pension costs as life
expectancy goes up.
Although it s possible the review might result in the removal of
the default retirement age altogether, the government has so far
taken a cautious approach. This means that a possible outcome of
the review is an increase in the "default retirement age" towards
age 70, although this might be implemented in stages over several
Is there anything I need to do?
Increasing the default retirement age or removing it altogether
will mean employers will have to change the way they think about
workforce planning. Employers will no longer be able to
assume staff will retire at 65, and they will not be able to force
them to do so. This will clearly have implications for recruitment
Under current rules, employers may allow staff to carry on
working at age 65 and over, but always with the certainty that
employees aged over 65 can be dismissed with six months' notice (as
long as the correct procedures are followed). Any change to these
rules may mean employers have to prove inadequate performance
before they can dismiss such employees. This could be a long and
If you have employees coming up to the default
retirement age of 65:
- Remember to operate the correct procedures if you wish to
retire an employee;
- If ane employee makes a request not to retire, take advice
before making a decision – our Employment Team can help you.
If you have employees aged 65 and over:
- Consider whether you would be happy to retain these employees
if the facility under current rules to dismiss them with notice
- Take advice from the Mentor Employment Law Team on your options
before you take any action.