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Default retirement age to be removed in April 2011

Under regulations coming into force on April 6 2011, employers will no longer be able to issue retirement notices to trigger the retirement procedure to employees who have reached the historical default retirement age (DRA).

 

The Employment Equality (Age) Regulations introduced in October 2006 provided the DRA which enabled employers to enforce retirement on those reaching 65 without risk of discrimination claims. Under the new Regulations, the DRA will be abolished along with the associated retirement procedures. Transitional arrangements are to be made for those employees who received retirement notices prior to 6 April 2011.

 

It may still be possible to retire an employee lawfully at a set age through an Employer Justified Retirement Age (EJRA) although there must be a legitimate cause for setting an EJRA which would stand up to challenge in an employment tribunal (this would normally apply to occupations that require particular physical strength or exceptional mental agility).

 

Further to the removal of the DRA, organisations will no longer be able to automatically refuse to employ someone who is over 65 (or within six months of reaching 65) as provided for in previous Regulations.

 

The abolition of the DRA may have an effect on the hiring and retiring of non-partner employees at law firms (such as assistant level lawyers, paralegals and support staff) which could reshape the age profile of many City firms. However, as the DRA does not cover partners within a business, it has never been applicable to law firm partners, instead EJRAs have been used as an alternative in partnership agreements.

 

However, the eagerly anticipated Supreme Court case of Seldon v Clarkson Wright & Jakes (likely to reach the Supreme Court in 2012) could have far reaching implications for retirement of law firm partners.

 

In 2008, partner Leslie Seldon argued that law firm Clarkson Wright & Jakes were wrong to enact the partnership agreement and retire him at 65, on the basis that there was no justification for doing so. The Employment Appeal Tribunal (EAT) however found that, although the provision did constitute direct age discrimination, the firm could justify his retirement to enable associates to move up the ranks to partnership and lessen the need to performance-manage-out senior partners.

 

In July 2010 The Court of Appeal upheld the EAT ruling, a verdict seen by many employment lawyers as a contentious decision. The Supreme Court case will have enormous consequences for what justification law firms may be able to use in order to retire a partner or an employee.

 

 

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