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Retirement of the Default Retirement Age Gareth Edwards

age to a later age, or have no default retirement age at all. They have chosen the second option and from October 2011 the Government proposes that the default retirement age will be abolished. For many decades we have been accustomed to a fixed retirement age.


Employers, employees and pension providers have worked according to this principle. The removal of the default retirement age will create uncertainty for

employers. Like the Government they have two options. Some already have no retirement age. Alternatively, employers can decide to set their own compulsory retirement age. However, if they do they will need to justify it by showing it as a proportionate means of achieving a legitimate aim. Whilst the current regulations with the default retirement age of 65 have allowed employers to dismiss employees when they reach 65, without having to pay redundancy or make any other payments, they also allow employers to plan their workforce requirements. In a time of high youth unemployment there are good policy grounds for creating vacancies through retirement. The retirement age also avoids the potential unpleasant task of managing older employees who are becoming less capable in their roles. The alternative is to have no retirement age and wait for employees to want to retire, or manage the workforce carefully and deal promptly and reasonably with any performance or capability problems. Employers do not have that much time to prepare for the proposed

changes. Although the Government plans for the default retirement age to be abolished in October 2011, it will also be abolishing the current statutory retirement procedures that require an employer to give an employee 6 months' notice of their impending retirement. This means there will need to be transitional arrangements in place by April 2011. The Government has still to announce its plans. Employers will now be faced with deciding whether to have their own

compulsory retirement age, and if they do decide to have a retirement age, they will need to have good evidence to show their reasoning. Helpfully, the Court of Appeal has very recently given its decision in a

retirement case - Seldon v Clarkson, Wright & Jakes - which sets out some interesting guidelines. It does not concern the retirement of an employee, but of a partner in a firm of solicitors. Partners are not subject to the default retirement age and therefore partnerships under the current regulations already face similar challenges to those that employers will face once the default retirement age is abolished. Mr Seldon, under the partnership agreement with his partners, agreed that partners would be compulsorily retired at 65. Mr Seldon, however, when it came to his retirement, wanted to work beyond 65. Having been retired he brought a claim for age discrimination. To defend the claim successfully the partnership had to show that they were justified in having a compulsory retirement age of 65. The case was first heard at an Employment Tribunal. The tribunal decided

in the partnership's favour and held that the compulsory retirement age had three legitimate aims:


ge UK has been pushing for reform of the retirement regulations and the decision in the Heyday case, which Age UK brought in 2009, indicated that the default retirement age of 65 was very likely to change. The Government either had to change the default retirement

1. Ensuring Associates were given the opportunity of partnership after a reasonable period ("dead men's shoes").

2. Facilitating the planning of the partnership and workplace by having a realistic long term expectation of when vacancies will arise (also "dead men's shoes").

3. Limiting the need to expel partners through performance management, thus contributing to the congenial and supportive culture in the firm ("collegiality"). Mr Seldon appealed to the Employment Appeals Tribunal. The EAT upheld the original Tribunal's decision on the two aims of "dead men's shoes" but not the aim of "collegiality". Mr Seldon then appealed to the Court of Appeal. The Court of Appeal upheld the "dead men's shoes" grounds, as a justification for the compulsory retirement age. The Court of Appeal also upheld the Tribunal's grounds of "collegiality". Sir Mark Waller, in the leading judgment of the Court said "… an aim intended to produce a happy workplace has to be within, or consistent with, the Government's social policy justification for the [Age] Regulations. It is not just with partnerships that it may be thought better to have a cut-off age rather than force an assessment of a person's falling off in performance as they get older". Later in his judgment, Sir Mark says " experience would tell me that it is a justification for having a cut-off age, that people will be allowed to retire with dignity." Sir Mark then goes on to say "...there is a very great difference between

employers or partners who are under-performing, but not by reason of age, and employees or partners who are doing their best, but it is no longer good enough because old age has caught up on them." Many employers will want to have a compulsory retirement age and the

Seldon case does provide some useful pointers for employers, including the need to allow employees to step into dead men's shoes, the need to create a happy workplace and allow people to retire with dignity. We do not yet know precisely what procedure the employer will need to

follow in place of the Statutory Retirement Procedure if the employer decides to have a compulsory retirement age. The procedure will undoubtedly have to be a fair procedure, but we await guidelines on the likely timetable that should be followed and the points to be considered in any consultation with the individual retiring employee. Perhaps surprisingly, the previous Government did not introduce a

framework of flexible working which might have allowed employees to request to work reduced hours so that they could move gradually towards retirement. The new Government, in its consultation document, has said that they will consider possible action on how employees and employers might be encouraged to discuss potential flexible working arrangements and options for flexible working with the aim of extending working lives.

Gareth Edwards

Gareth Edwards is a partner in the employment team at Veale Wasbrough Vizards.

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