End of the line for the default retirement age
End of the line for the default retirement age
The Government has today confirmed that it will remove the Default Retirement Age (DRA) so that people have more choice when to stop working. As well as benefiting individuals, the freedom to work for longer will provide a boost to the UK economy.
Ministers have decided to proceed with their plan to phase out the DRA between 6 April and 1 October 2011. The Governments written response to its recent consultation on the issue, and new guidance to help businesses adapt to the removal of the regulation, have been published today.
Currently the DRA enables employers to make staff retire at 65 regardless of their circumstances, but the Government feels the rules must change as people are living longer, healthier lives.
Employment Relations Minister Edward Davey said:
Retirement should be a matter of choice rather than compulsion people deserve the freedom to work for as long as they want and are able to do so.
Older workers can play an incredibly important role in the workplace and it is high time we ended this outdated form of age discrimination.
We are putting in place support to help business adapt to the change, but it is important to remember that about two-thirds of employers already operate without fixed retirement ages - and many of those with retirement ages already offer flexibility for workers to work longer.
Minister of State for Pensions Steve Webb said:
Its right that we put an end to this outdated form of discrimination where employers can force people out of a job simply because of their age. We will work with employers to ensure that the transition is fair and well understood.
The Government will help employers adapt to the change it:
Has worked with Acas (Advisory, Conciliation and Arbitration Service) on new comprehensive guidance that has been published today.
Has also published today new Age Positive guidance setting out how many employers manage without fixed retirement ages and benefit from the employment and retention of older workers.
Will remove the administrative burden of statutory retirement procedures. With the DRA gone there is no reason to keep employees right to request working beyond retirement or for employers to give them a minimum of six months notice of retirement.
Will introduce an exception so that there are not unintended consequences for employers that currently voluntarily offer group risk insured benefits (income protection, life assurance, sickness and accident insurance, including private medical cover). There had been concern that removal of the DRA could lead to increased costs and uncertainty for businesses by in effect removing the cut-off point beyond which such benefits are currently no longer offered.
Acas Chief Executive John Taylor said:
We stand ready to assist any employers who have been operating with a retirement age adapt to the change in the law. Acas has extensive experience of helping organisations understand how they can comply with Government legislation. Our guidance will be available on the Acas website.
The change means that from 6 April 2011, employers will not be able to issue any notifications for compulsory retirement using the DRA procedure. Between 6 April and 1 October, only people who were notified before 6 April, and whose retirement date is before 1 October can be compulsorily retired using the DRA. After 1 October, employers will not be able to use the DRA to compulsorily retire employees.
Although the Government is removing the DRA, it will still be possible for individual employers to operate a compulsory retirement age, provided that they can objectively justify it. Examples could include air traffic controllers and police officers.
The deregulatory measure is one of the steps the Government is taking to help encourage people to work for longer against the backdrop of demographic change. Others include raising the state pension age to 66 faster than currently scheduled and re-establishing the link between earnings and the basic state pension.
GUIDANCE FOR EMPLOYERS ON RETIREMENT RULES IS TOO LITTLE, TOO LATE CBI
The CBI today commented on the Governments announcement that it is pushing ahead with scrapping the default retirement age (DRA).
John Cridland, CBI Director-General Designate, said:
The guidance for employers on working without the default retirement age is too little too late. The Governments decision to scrap the DRA leaves businesses with a number of difficult practical issues.
The impact on employers, especially smaller ones, will be considerable. There is not enough clarity for employers on how to deal with difficult questions on performance. Less than three months is not enough time for businesses to put in place new procedures. The outcome will be more unpleasant and costly legal action.
Employers accept that more people will want to work beyond 65 as the population ages, but the Government has not recognised the fundamental question, which is how should employers manage retirement on the basis of a performance appraisal. This will be particularly acute in physically-demanding sectors.
The majority of respondents to the Governments consultation had concerns about the adequacy of existing employment law and about the timescale for the removal of the DRA. This evidence strongly supports the CBIs concerns, but the Government has ignored these legitimate consultation findings.
While it is helpful that group insurance products are being excluded from age discrimination coverage, we now look to the Governments employment law review to help businesses, especially smaller ones, to deal with the practical implications of the decision to scrap the DRA. The law of unfair dismissal also needs to be revised and simplified.
DRA - Recruiters will play key role in helping older workers access new opportunities, says REC
The Government announced today its intention to scrap the Default Retirement Age (DRA) of 65. The aim is to give people a greater choice on when they stop working. The REC has responded by underlining the key role that recruiters can play in helping older workers access new opportunities.
Following an extensive consultation process, the Department of Business Innovation and Skills said today it would be phasing out of the DRA between April 6 and October 1 this year.
Commenting on its removal, Tom Hadley, the Recruitment and Employment Confederations Director of Policy and Professional Services, said:
The world of work will continue to evolve and to reflect the changing demographics in our society. There will be an increasing desire and, in many cases, an increasing need for individuals to prolong their working lives. Professional recruiters can play a key role by helping older workers to explore new opportunities and access both temporary and permanent jobs.
Scrapping the DRA may make succession planning a bit more complex. Working with employers to develop long-term resourcing strategies which take changing demographics and new regulations into account is a further opportunity for recruiters to demonstrate real added value.
Looking ahead, the Government needs to drive a pro-active job creation agenda to boost opportunities for workers of all ages and avoid a 'bottle-neck' for younger job seekers. This week's Jobs Summit was a good start but must be followed up with real progress from Government in fostering investment and jobs."
To help businesses and employers, the Government has also issued new guidance today to help them adapt to the removal of the regulation.