Government confirms retirement age to be scrapped from April 2011

The Government is going ahead with a previously-announced plan to remove the right to end workers' employment just because they have reached the age of 65, despite pressure from business groups to retain that right.

A Government statement said that the change was being put in place because people are living for longer and staying healthy enough to work later in their lives.

"It’s right that we put an end to this outdated form of discrimination where employers can force people out of a job simply because of their age," said Minister of State for Pensions Steve Webb. "We will work with employers to ensure that the transition is fair and well understood."

"Retirement should be a matter of choice rather than compulsion – people deserve the freedom to work for as long as they want and are able to do so," said Employment Relations Minister Edward Davey. "Older workers can play an incredibly important role in the workplace and it is high time we ended this outdated form of age discrimination."

Business lobby group the CBI said that the policy change leaves businesses with too much uncertainty about how older employees should leave businesses.

“Employers accept that more people will want to work beyond 65 as the population ages, but the Government has not recognised the fundamental question, which is how should employers manage retirement on the basis of a performance appraisal," said CBI director general designate John Cridland. "This will be particularly acute in physically-demanding sectors."

“The majority of respondents to the Government’s consultation had concerns about the adequacy of existing employment law and about the timescale for the removal of the DRA," said Cridland. "This evidence strongly supports the CBI’s concerns, but the Government has ignored these legitimate consultation findings."

The policy will be phased out between 6 April and 11 October this year. From April, employers will no longer be able to give the six months notice required for compulsory retirement, meaning that by October those retirements will have stopped.

The Department for Business, Innovation and Skills (BIS) said that there are 850,000 people over the age of 65 in work in the UK.

BIS said that companies will still be able to have forced retirement policies if they can justify them. "Although the Government is removing the DRA, it will still be possible for individual employers to operate a compulsory retirement age, provided that they can objectively justify it. Examples could include air traffic controllers and police officers," said a BIS statement.

An employment law case last summer clarified exactly what objective justification might mean in a private sector context.

A partner at a law firm sued for age discrimination when forced to retire at 65, but the Court of Appeal ruled last July that the firm was allowed to justify the forced retirement because it was for a good reason, which was to create promotion opportunities for younger workers.

"[This] case actually established that you can justify a retirement age and can do it on the basis of wanting a balanced workforce, to create opportunities for younger employees," said employment law expert Tom Flanagan of Pinsent Masons, the law firm behind OUT-LAW.COM.

"The European Court of Justice had said in an earlier case that compulsory retirement schemes had to have legitimate policy objectives, but the Court of Appeal said that this was a Government issue, not a test that private employers needed to satisfy," he said.