The end of the default retirement age

The news that the Government is planning to scrap the default retirement age, meaning staff could not be sacked simply for reaching the age of 65, should be welcomed.

The current legislation means bosses can dismiss staff once they have reached 65 without paying any financial compensation. The only legal obligation to employers is to discuss the plans with the relevant employee six months before they reach 65.

The Government has already announced that the age at which workers can draw a state pension should increase to 66, so this latest news is the next logical step.

Campaigners have called the announcement a victory against ageism, and the Government has said workers will not be forced to work past 65, but rather be given the option under the proposals. Of course, working past 65 can increase a pension pot and potentially allow staff to maintain a certain standard of living, so many will find this tempting.

The proposed plans, which are now entering a period of consultation, could be in effect as early as April next year, with a full introduction from October 2011. The news should be welcomed, but equally businesses – particularly SMEs – must be prepared to implement the new regulations when they come into effect.

The current legislation means an employer can dismiss a member of staff at 65 simply by following a procedure, and the employee cannot really challenge the decision.

In some circumstances it may well be an individual may no longer have the adequate abilities to carry out their job at the age of 65, but in others it is certainly the case at the moment, that an employer can dismiss a fit, able and effective employee just for reaching 65.

Employers will still be able to dismiss their staff at 65 if their performance is poor or they simply aren’t up to the job they are paid to do – this won’t change.

It has seemed too many that the current legislation goes against the principle that employers should not discriminate on the grounds of age. However, businesses will have only a short space of time to prepare for the changes, and it is important to get good advice on how to incorporate any new legislation into employment procedures.

Chris Boyle, head of employment at Napthens solicitors.