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Default Retirement age to be scrapped
Added: 2010-07-29 10:38:19.0After months of speculation, the government have announced plans to scrap the default retirement age in the UK from October 2011. This means that employers will no longer be able to dismiss staff without compensation, once they reach 65.
The new plans, which have been largely debated over the past year or so, signify a bold move for the government and many had expected that they would simply increase the default retirement age to somewhere between 66 and 70. Instead they have opted for a complete removal and have provided only one stipulation for employers; that they must hold a meeting with the employee at least 6 months before the employee’s 65th birthday. In this meeting, they can discuss the future with the employee; and it is then entirely at the discretion of the employer whether or not to end the employment.
The wheels have now been put in motion to bring this new legislation in and it is expected that employers will begin to feel the changes in April of next year, given the 6 month meeting rule discussed above. It is likely therefore that after next April, no forced retirement notices could be issued.
Although retirement age reform was included in both coalition government party manifestos, many would have expected more warning before introducing such an important piece of legislation. According to the CBI, the government are moving too fast with this potentially landmark legislation and have warned that they are leaving businesses “with many unresolved problems”.
From what we have seen of the coalition government so far, it appears that they are not wasting any time in introducing what they see as a crucial measure to steady the economy. The government will hope that making this change will encourage people to work for longer and not be so dependent on the state. Although those who are 65 and older will be entitled to the state pension, the fact that they may still be paying tax on earnings should help with the budget deficit. Some activists have even argued that the change will inject billions of pounds into the economy.
What will this mean for your company paperwork?
This new legislation signifies a fundamental change in the ways that businesses will need to operate. It will also have a big impact on companies’ HR paperwork; both the employees’ contracts (not just for staff members who are close to 65) and the company’s staff handbook will need to be revised. Failure to do so could create large problems for the employer.
Fear not though, Cleardocs will be here to help. Although these measures have only be announced today, we are already working on making sure that we are ready to be on hand to help businesses implement the new rules as quickly and as easily as possible. More to follow in due course.
How do you feel about the change? Do you think it’s a step in the right direction and the removal of an antiquated rule? Or do you think that it will make things more complicated and is removing the default retirement age taking away yet more power from the employer? Let us know by commenting below.
The content of this blog is not legal advice and should not be relied on as such, or used instead of seeking legal advice.
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