Retirement policy

Our retirement policy provides that you do not operate a compulsory retirement age and instead you operate a flexible retirement policy that permits employees to voluntarily choose to retire at any time. This follows on from the abolition of the default retirement age.

Abolition of the DRA

Where you wished to compulsorily retire an employee on their contractual retirement age (or on or over the default retirement age (DRA) of 65 if you hadn’t set a specific contractual retirement age), you used to have to follow a detailed statutory retirement procedure to effect that retirement. However, the government abolished both the DRA and the statutory retirement procedure some time ago and so you can no longer use the DRA to compulsorily retire employees.

Thus, with the abolition of the DRA (in circumstances where there is no objectively justified compulsory retirement age), employees have a choice whether to work longer and you are not permitted to dismiss them just because they have reached the age of 65. You would therefore need to point to some other potentially fair reason to dismiss, and follow a fair procedure, avoiding age discrimination.

No compulsory retirement age

As a result of these changes, our Retirement Policy states that you do not operate a compulsory retirement age but instead you operate a flexible retirement policy that permits employees to voluntarily choose to retire at any time, provided they give you their required period of notice of termination of employment. If an employee wants to retire voluntarily, that amounts to a resignation, not a dismissal. In this scenario, if the employee asks to retire, simply request the employee to formally confirm their wishes in writing. Ideally, you will want the employee to give you as much advance warning as possible of their intended retirement to enable you to plan for succession, so our policy requests them to do this and requires their assistance and co-operation with succession planning. It also provides for you to formally acknowledge the employee’s notice to retire and to meet with them to discuss the retirement arrangements. Finally, our policy provides a framework for you to discuss possible retirement plans with employees from time to time on an informal basis, but without their being bound by such informal workplace discussions.

Objectively justified retirement ages

Even though the DRA has been abolished, it is still possible for some employers to continue to operate a compulsory retirement age, provided always that they can objectively justify it, which will be extremely difficult to do in other than very exceptional cases. Examples could include air traffic controllers and emergency services workers. If you think you can objectively justify retaining a compulsory retirement age, you’ll need to redraft the policy accordingly.