Implications for the UK Default Retirement Age 12/10/09
Heyday (now part of Age UK), had sought a judicial review of the Employment Equality (Age) Regulations 2006 (“the Regulations”). The Regulations implement an EC Directive against age discrimination and created a default retirement age allowing British employers to dismiss their staff without having to pay out severance payments when employees reached the age of 65, provided a formal procedure was followed.
The decision
The High Court decided that the default retirement age was lawful when it was first introduced in 2006 and that part of the regulations would remain in force. The High Court agreed with the Government’s argument that the default retirement age was a way of achieving a legitimate aim and was a proportionate way of doing so. However the High Court did observe that there now existed a compelling case for adopting a default retirement age higher than 65.
In explaining their decision, the High Court stated that it had taken into account the Government’s intention to bring forward a review of the appropriateness of the default retirement age. That review will now take place in 2010 and not 2011 as had first been suggested. The High Court also stated that had the default retirement age been introduced today it is unlikely that it would be lawful given the state of the economy. However, the decision to allow it was based on the circumstances and evidence available at the time of its introduction.
Implications of the decision
The observations made by the High Court are likely to lead to the dismissal of hundreds of age discrimination cases which have been frozen in tribunals that were awaiting the outcome of this case. These cases were raised by employees who claimed they had been unfairly retired.
The ruling will be welcomed by employers in that it will give them greater certainty over workforce planning for now. However, given the High Court’s comments regarding the future of the default retirement age, employers cannot afford to be too complacent.
What seems pretty clear from this ruling is that the days of the default retirement age of 65 are numbered. With the court decision in mind, an ageing population and with the state of the economy as it is, it is probable that the Government will raise the default retirement age next year (to 68 or 70 perhaps) or remove the ease with which an employer can force someone to retire.
Further information
For further information on this or any employment issue, please contact Alan Thomas, Alan Glazer or your usual contact within the Employment Unit.
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