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Abolition in April of Compulsory Retirement – what it means for your business

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Most people will be aware that the government has announced the abolition of the so called default retirement age and the rules and procedure covering the compulsory retirement/dismissal of employees at aged 65.

The new law now means that employers do not have the right to terminate employment simply because the employee has reached either 65, or the normal retiring age for the business in which they operate.

Employers will now only have until 5 April to follow the procedure which does allow them to dispense with employees on retirement grounds. In practice, the new rules now provide as follows:-

  • The last day on which an employer can issue a notice of retirement under the default procedure will be 5 April.
  • As 12 months is the maximum notice of retirement that the employer can give, the last day on which an employee can be compulsorily retired will be 5 April 2012.
  • The last day on which an employee can make a statutory request to the employer not to retire on the intended date of retirement will be 4 January 2012.
  • If an employer agrees to allow the employee to work beyond their intended day of retirement, the maximum extension possible is six months.

As Paul Grindley, Head of the Employment team at Yorkshire law firm Keeble Hawson LLP points out:

“This means that any retirement dismissal notified on or after 6 April will amount to unlawful age discrimination unless it can be objectively justified. This “objective justification” loophole will in practice be very difficult to establish and any employee making a claim to an employment tribunal for unfair dismissal/age discrimination, is likely to be awarded compensation which is unlimited and includes an award for injury to feelings.”

“We would therefore advise all employers to have one last look at their own requirements, so that they can then if they need to, take advantage of the short period which is left.”

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