Employees will soon be able to choose when they stop working under new government proposals to scrap compulsory retirement.
From April next year, the “default retirement age” – which allows employers to force workers to retire at 65 – will be phased out over a six-month period.
After the credit crunch, some workers were forced to delay their retirement as a 40 per cent fall in stock markets in the 12 months after October 2007 wiped billions off the value of pension funds.
The issue of the default retirement age has led to much discussion within the legal and business press.
CBI deputy director general John Cridland added: ‘Scrapping the default retirement age will leave a vacuum and raise a large number of complex legal and employment questions, which the Government has not yet addressed.’
There would be ‘uncertainty among employers and staff’ who would not know where they stood, he added.
The decision to scrap the default retirement age has split the government and commentators.
On the one hand, Ronnie Fox, of Fox Lawyers, said: ‘One unintended consequence is bound to be a major increase in disputes about whether a particular employee is indeed capable of carrying on working. 'That will generate work for lawyers, create pressure on employment tribunals and damage workplace relationships.’
On the other hand, the Government estimates there will be between 200 and 400 fewer tribunal cases as a result of the changes, a point disputed by employers' groups.
With respect to the law itself, employers will still be able to operate a compulsory retirement age, provided that they can objectively justify it. The Government’s proposals call these “employer-justified retirement ages” (EJRAs). To justify a compulsory retirement age, the employer must be able to show that it is a proportionate means of achieving a legitimate aim.
Employers can also stop using a compulsory retirement age, with individual retirements decided on a case-by-case basis. The Government intends to issue guidance on managing without a retirement age. Again, the employer will have to show that the decision to retire someone is objectively justified.
Habing looked at the draft provisions, due to the presence of grey legal areas and big potential financial stakes for both employers and employees ,stand by for some spectacular legal claims.
The toxic mix of legal uncertainity and big financial claims means that the lawyers and mediators may find themselves pretty busy.
Justin Patten, Mediator