The High Court ruled on 25 September 20091 that the UK’s default retirement age (DRA) is justified, and this allows employers to force employees to retire at 65 with no risk of discrimination litigation. But not for much longer, it would appear.
At the moment the UK forced retirement age is regarded by the government as ‘appropriate and necessary’. An ageing worker’s employment can be terminated at the age of 65 without a redundancy payout, even if they do not wish to retire, and employers can also refuse to recruit anyone over this age. The majority of people retire before 65; however 1.3m people choose to work beyond state pension age, and many more say they would work past 65 if their employer permitted it. The government had previously promised to review the DRA in 2011 to see if it was still needed, but ministers have brought the review forward to respond to changing demographic and economic circumstances2.
Mr Justice Blake, the judge presiding at the case brought by the recently-merged charity Age UK (formerly Age Concern and Help the Aged), stated there was a compelling case for the retirement age to rise in the light of the government bringing forward its DRA review, observing that the retirement age introduced by the government back in 2006 did in fact comply with an EC Directive against age discrimination, but that the case for raising the age ‘would seem to be compelling’. The judge stated that he would have ordered a review, after which he couldn’t ‘presently see how 65 could remain as a DRA’.
The charity is now challenging MPs to act to overturn the legislation, by amending the Equality Bill currently making its way through Parliament. Andrew Harropp, head of public policy at Age UK, called for immediate action to outlaw forced retirement before the next election.
Michael Rubenstein, publisher of Equal Opportunities Review3 believes this latest challenge by Age UK to the statutory default retirement age (DRA) ‘almost certainly spells the end to forced retirement at age 65 and makes it much more likely than not that the default retirement age will be abolished altogether at the end of the review carried out by BIS next year.’
He told The People Bulletin:
‘The legal issue before the court was whether the government had enough evidence to justify a DRA of 65 when it was introduced in 2006. Mr Justice Blake says that there was a legitimate social policy aim of “maintaining confidence in the labour market”. He goes on to suggest, however, that age 65 is no longer justified “in the light of changed economic circumstances and the generally recognised problems that a longer living population creates for the social security system.”
It would be a brave government that decided to make no change to the DRA nevertheless. It is possible that the outcome of the BIS review will be an increase in the DRA to age 68 (the judge’s favourite) or age 70. This would be welcomed by some employers and we have yet to find out the Conservative Party’s policy on mandatory retirement.
Much more likely, though, is that the DRA will be abolished altogether, with effect from 2011. And if the DRA goes, it also will become unlawful to discriminate in recruitment against candidates who are approaching or have reached age 65.’
Tom Flanagan, employment partner at law firm Pinsent Masons LLP pointed out that without a DRA there may be an increase in employment disputes caused by a lack of certainty around retirement. ‘There is a significant voice within UK businesses that is against the idea of removing the DRA, because it’s viewed as an essential part of employment practice, enabling businesses to plan and develop their workforces,’ he said. Jonathan Maude, employment law partner at Hogan & Hartson thinks the lure of tax receipts and reduced state pension obligations will win the day: ‘The government will probably take this action [abolish the DRA] as financially it’s in its interests to do so as it keeps people off the state pension and keeps them financially contributing through tax and NI.’
The Chartered Institute of Personnel and Development (CIPD) expressed disappointment at the decision to uphold retirement age legislation. ‘It seems counter-intuitive to drag this decision out even further while thousands of older people will be forced out of work in an already difficult jobs market,’ said CIPD diversity adviser, Dianah Worman. ‘As the HR body we do not buy the HR argument that businesses can’t manage their workforce without the DRA. If you have poor performers in your organisation you should also have the performance management systems to deal with them. You wouldn’t wait 25 years to remove a poor performing 40 year-old.’
The pressure on the state pension scheme was highlighted when the shadow chancellor, George Osborne announced at the Conservative Party conference on 7 October his intention to raise the state pension age 10 years earlier than the government had planned – claiming this would slice around £13bn a year off government spending.
1R (on the application of Age UK) v Secretary of State for Business, Innovation and Skills [2009] EWHC 2336(Admin)
2www.dwp.gov.uk/newsroom/press-releases/2009/july-2009/dwp011-09-130709.shtml
3Author of a previous People Bulletin article on the Equality Bill and publisher of Equal Opportunities Review