Government begins consultation on retirement age

Out-Law News | 30 Oct 2009 | 5:38 pm | 2 min. read

The Government has asked business to give its views on raising the default retirement age beyond 65 in the aftermath of a court case which declared that retirement age lawful.

The High Court ruled in September that the UK's retirement age was not a breach of European discrimination law, but it said that it was influenced by the knowledge that the Government was considering raising the age.

Consultation on that process has now begun. The Department for Business, Innovation and Skills (BIS) is asking businesses to describe their retirement policies and explain what the costs and benefits would be to them if the age were raised or abolished altogether.

"The Government is asking for evidence including [information on] the operation of the default retirement age [DRA] in practice; the reasons that businesses use mandatory retirement ages; the impacts on businesses, individuals and the economy of raising or removing the default retirement age; the experience of businesses operating without a default retirement age; how could any costs of raising or removing the DRA be mitigated and benefits realised," said a statement from BIS.

"The laws around employment and retirement need to reflect changes in economic and social circumstances," said minister for pensions and the ageing society Angela Eagle. "As people live and work for longer, it is sensible that we have the debate on what works for business and individuals."

BIS has asked for submissions by 1 February 2010.

The court case challenging the DRA was brought in 2006 by Heyday, part of Age Concern. It challenged the Employment Equality (Age) Regulations 2006, which came into force on 1st October 2006.

It said that the laws were incompatible with the European Union's Equal Treatment Directive because including a compulsory retirement age was discrimination against people on the grounds of their age.

The case was referred to the European Court of Justice (ECJ) which said that compulsory retirement ages could be legal under the Equal Treatment Directive if they were "a proportionate means of achieving a legitimate aim". It left the High Court to decide if that was the case in the UK.

The Government said that the age was a requirement for businesses who needed to plan their workforce needs and a requirement for the Government in planning pensions and benefits needs.

The High Court said that it would not rule against the Government while a review was pending.

"If a DRA is retained at all, the review must give particular consideration to whether the retention of 65 can conceivably now be justified," said Mr Justice Blake in that ruling.

"If Regulation 30 had been adopted for the first time in 2009, or there had been no indication of an imminent review, I would have concluded for all the above reasons that the selection of age 65 would not have been proportionate. It creates greater discriminatory effect than is necessary on a class of people who both are able to and want to continue in their employment," he said.