New Rules for Retirement


New Rules for RetirementThe default retirement age, which was 65 years old, was abolished on 1st October 2011. This means that employees have the option to continue working after 65 years of age and if they are compulsorily retired then they may be able to bring claims for age discrimination and unfair dismissal.

An employer can still set a default retirement age, but any decision to retire an employee must be objectively justified. This will depend on the specific business, the specific role and the needs of the business in the context of the existing labour market.

In the case of Seldon v Clarkson Wright & Jakes (CW&J), a former senior partner of a law firm sued for age discrimination, because the firm had a compulsory retirement age of 65 years old. After several hearings, the Supreme Court ruled that CW&J's retirement policy pursued legitimate aims including those of providing opportunities for younger staff, facilitating workforce planning and limiting the need to sack underperforming partners thus contributing to a congenial workplace. However, it remains to be determined whether or not having a mandatory retirement age of 65 is a proportionate means of achieving CW&J's "legitimate" aims.

Assessing proportionality is not an exact process. Employers will need to show they have considered carefully why the age they have selected is suitable. This will have to be assessed on a case by case basis. For example, Seldon retired in 2006 so the retirement age of 65 may not be considered proportionate today, and a company that carries out lots of different functions would find it difficult to adopt a standard retirement age. Also, some employees are fitter and more capable than others doing similar jobs.

It may be legitimate to set a retirement age for particular job functions, but employers must consider the business needs for setting a retirement age in the first place and why it should apply to a given age.

If you require any further information please contact Justin Sadler on 0118 958 9711 or by email: justin@barrettandco.co.uk

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