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Continuing Problem of Compulsory Retirement

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My View: Sian Williams, Employment Solicitor at Law Firm Flint Bishop Discusses Continuing Problem of Compulsory Retirement.

The subject of whether a default retirement age (DRA) of 65 for employees is lawful has been under constant debate since the introduction of the Employment Equality (Age) Regulations 2006.

Employers may have breathed a sigh of relief towards the end of last year when the government successfully defended the legal challenge to the DRA made by Age Concern and Help the Aged (widely known as the “Heyday” case), however, things are not quite as they seem.

The judge in the Heyday case placed weight on the fact that the DRA of 65 was scheduled to be reviewed in 2010 and he indicated that any attempt to keep the DRA at 65 would be unlikely to be lawful, particularly in light of the current climate.

There are currently more than 1.4 million people working past state pension age, according to recent labour market figures from the Office of National Statistics. This is up from 1.2 million people the year before.

The government has recently concluded a wide-ranging consultation exercise to gather views and opinions from people who have experienced the DRA in operation. This consultation closed on 1 February 2010 and we all wait with interest to learn if it’s findings.

Until the findings of the consultation are announced employers are left to speculate whether a DRA of some form will be retained or whether it will be abolished all together. One thing that seems certain, however, is that a DRA of 65 will not remain.

For those who don’t know, state pension age is set to gradually increase to 68 by 2046. Therefore, state pension age is now 66 for people born on or after 6 April 1960, 67 for those born on or after 6 April 1969, and 68 for those born on or after 6 April 1978. Taking this into account it seems unlikely that the government would allow a situation where people were prevented from working once they turned 65 yet were not allowed to draw a pension until 68.

Furthermore, in light of the comments from the judge in the Heyday care, it is unlikely the government will want to provoke a further legal challenge as a result of clinging to a DRA of 65.

The government may decide to take a middle ground and simply increase the current DRA from 65 to a higher age, say 68 or 70, perhaps incorporating a further review date in a few years. If this occurs then employers will be able to continue to utilise their current retirement procedures (albeit with slightly older employees).

However, many government ministers have made comments about the changing demographics in Britain and the need of the law to reflect modern society and some have even gone so far as to say that a DRA of 65 is arbitrary. This begs the question of what makes a DRA of 68 or 70 any more arbitrary than 65.

Abolishing the DRA and allowing employees to work indefinitely is likely to be met with opposition from employers who may not want to be required to employ an increasingly aging workforce without the opportunity to introduce “new blood” into their organisation. Many employers would also not relish the prospect of having to dismiss someone who has had a long and successful career (but who refuses to retire) on capability grounds.

Whatever avenue the government decides to take it seems that they will meet opposition and, whilst at this point in time they may choose the middle ground of increasing the DRA, given the current trend in Britain towards an aging population who are staying in relatively good health, it seems that, in the long term, having any standard default retirement age will be difficult to justify.

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