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Employees could be working for longer

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The Government has confirmed that the default retirement age (DRA) of 65 is to be phased out between 6 April and 1 October 2011.

As a consequence, employers will no longer be able to let employees go simply because they have reached the male state retirement age.

The change means that from 6 April 2011, employers cannot issue any notifications for compulsory retirement using the DRA procedure. Between 6 April and 1 October, only people who were notified before 6 April, and whose retirement date is before 1 October, can be compulsorily retired using the DRA. While after 1 October, employers will not be able to use the DRA to compulsorily retire employees.

Commenting on the announcement, Ed Davey, the employment relations minister, said that firms could still dismiss workers if it was felt they were no longer capable of performing their duties.

The minister commented: “As of now, you are still able under the Employment Rights Act 1996 to fairly dismiss someone if you go though the proper processes – and one of the reasons you can dismiss someone fairly includes capability.”

Employers will continue to be allowed to run with a compulsory retirement age for employees provided there is an objective business justification for doing so.

The Government has promised help for employers in dealing with the move. It has pledged to ease the admin burden of statutory retirement procedures. With the DRA dropped, it said, there is no reason to keep employees ‘right to request’ working beyond retirement or for employers to give them a minimum of six months notice of retirement.

Planning for the day that any of us stop working is important, especially if you are a business owner. For some good, practical guidance on how best to look forward to a comfortable retirement, why not give us a call?