Retirement

Overview

Audrey Williams, Fox Williams LLP Last Modified  21 December 2015

The concept of retirement has changed radically in the last five years, and significant restrictions have been placed on employers’ ability to retire employees since the default retirement age (set at age 65 in 2006) was repealed on 6 October 2011 and phased out.

Employers now cannot require employees to retire, and must allow them to stay on until they choose to retire, unless they can identify legitimate business reasons why a particular retirement age is justified, necessary and appropriate for their organisation, and are able to defend this retirement age in the event of a discrimination claim.

Successive governments have encouraged individuals to continue working (in the light of changing demographics, and the cost of supporting retirees or the “economically inactive”) in the belief that this has positive benefits for older workers and enables employers to retain experienced and skilled staff.

Key points

  • There is no longer a state or default retirement age.
  • Employers should not pressure employees into resigning because they are approaching a certain age, including those who are at, or over, the state or company pension age.
  • Employees should inform their employer of their intention to retire in accordance with the notice provisions in their employment contract.
  • Compulsory retirement is only possible where the employer can justify it objectively, based on social policy aims in the public interest which go beyond the business’ own needs, and where forced retirement at a particular age is a proportionate means of achieving them.
  • Workplace discussions should take place on a regular basis, to explore older workers’ career plans, to enquire about when they may wish to retire, and to enable the organisation to manage resources and budgets.
  • Employers need to avoid making an assumption that an employee's performance may decline as a result of age.
  • Employers must avoid discrimination against any workers on the grounds of age.