These proposals are part of the UK's obligations to comply with
the European Employment Directive of 2000.
Under current practice, companies are able to dictate the
retirement ages of their staff without the need to justify the age
that they set. This means that although an employee is fit and able
to continue working he is forced to leave because he has reached
the age (be it 60 or younger) that his employer has set. At present
only 30% of people are in employment by the age of 65.
In their statement to Parliament, Patricia Hewitt, Secretary of
State for Trade and Industry and Alan Johnson, the Secretary of
State for Work and Pensions, advised that:
"This country cannot afford to squander the
skills and experience workers of any age have to offer, and
demographic changes mean that employers who cut themselves off from
a proportion of the skills pool on the basis of prejudice will lose
out."
The new legislation will impose duties on employers to justify
the setting of any retirement age on their employees and this will
be open to challenge.
The Government has been working towards these proposals since
1997, when it launched its Age Positive campaign. More recently, it
issued a consultation document entitled Age Matters which focused
on the age discrimination strand of the European Directive.
The effect of the proposed legislation on pensions was also
discussed by the Ministers during their statement:
"With the abolition of the earnings rule in
October 1989, the link between retirement and entitlement to the
state pension was removed, and so people can continue to work
beyond state pension age and still receive their state pension.
Individuals can also choose to continue working and defer their
state pension, and the recent Pensions Act contains more generous
options for deferral, to be introduced by 2005, including for the
first time, the option of taking a lump sum. In April 2006, tax
rules preventing people from drawing their occupational pension
whilst continuing to work for the same employer will be
abolished."
Emma Grossmith, an employment law specialist with Pinsent
Masons, the law firm behind OUT-LAW.COM, said:
"The Government has indicated that the new
age discrimination legislation will follow a model of the
legislation which already exists in relation to requests for
flexible working. Currently, whilst employers are under a duty to
consider such requests properly, there are numerous and wide
grounds on which they can legitimately refuse them. Assuming the
new legislation against age discrimination is drafted similarly
widely, employers might have less to worry about than the
government would like them to think."
Consultation on the draft regulations will take place during
summer 2005, dependant on the outcome of the consultation it is
hoped that the legislation will be in force as of 1st October
2006.
