Retirement Policy (Compulsory Retirement Age)

The law in relation to Retirement is changing.

As of the 6 April 2011, the Default Retirement Age (DRA) of 65 is being phased out. From that date, no new notifications using the Default Retirement Age process can be issued. Furthermore, there will be no set retirement age and employees will be free to choose when they retire.

Employers can still operate their own compulsory retirement age provided they can show it is objectively justified. This justification is valid if the reason for a set age is needed:

• to further a legitimate aim of the business (for example, the health and safety of employees or the public); and
• the actions taken to achieve that aim are appropriate and necessary.

Thus, if an employee is involved in physical labour and because of age they are no longer able to do it, then the employer could show that they should be retired because it is objectively justified. However, it will be difficult for employers to prove that a Compulsory Retirement Age is objectively justified; if employers wish to have in place a Compulsory Retirement Age this may leave them open to possible employment tribunal claims based on age discrimination.

This Retirement Policy (Compulsory Retirement Age) template should be used by employers wishing to have in place a Compulsory Retirement Age. This Policy provides for an employer to set a retirement age on the basis of objective justification and sets out the procedure to be followed.

Please note that the test of objective justification will not be an easy one to pass and the law is relatively new in this area. We recommend that an employer takes legal advice if they wish to consider operating with a set retirement age.

This Policy is in Microsoft Word format, written in plain English, easy to use and edit.

For a Retirement Policy with No Compulsory Retirement Age please see Retirement Policy (No Compulsory Retirement Age).