The government is planning to scrap the default retirement age in the UK from October 2011. Under the proposal, employers will not be allowed to dismiss staff simply because they had reached the age of 65. Activists, who have long campaigned against the rule, welcomed the proposal as a “victory” against ageism.
Currently, an employer can force an employee to retire at the age of 65 without paying any financial compensation. The only obligation on an employer is to hold a meeting with the member of staff to discuss the employee’s retirement at least six months before their 65th birthday. At the end of that meeting it is entirely at the discretion of the employer whether or not to terminate the employee’s employment at 65 or allow them to work on past that date for either a certain period of time or indefinitely. Under the new plans, no forced retirement notices can be issued after 6 April 2011- six months before the October change.
Michelle Mitchell of Age UK stated that “Everybody stands to win from scrapping forced retirement. People over 65 will have full employment rights for the first time. The economy will benefit from older workers’ precious skills and experience and their increased buying power.” The government also hopes the change will encourage people to work for longer, against a background of an ageing population. That could ease the strain on public finances as more people continue to pay tax, while at the same time claiming the state pension from an older age.
There has however been criticism that the government’s timetable to scrap the default retirement age will give companies little time to prepare and some employers are worried it will complicate the job of managing a workforce and add to overall costs.
Under the new plans, no forced retirement notices can be issued after 6 April 2011. Give us a call if you have any questions on this – we are happy to help and don’t charge for quick questions!
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