Impasse over retirement age policy reported

Newspaper reports in April 2004 suggested that disagreements within the UK government are holding up proposals for age discrimination legislation. At issue is the scope for employers to insist on mandatory retirement ages for their employees.

The government is currently drawing up proposals for UK legislation to outlaw age discrimination in employment and vocational training in response to the relevant requirements of the EU framework equal treatment Directive (2000/78/EC), adopted in November 2000 (EU0102295F). The government is committed to bringing the age discrimination legislation into force on 1 October 2006.

In July 2003, the government published a consultation document, Equality and diversity: age matters, seeking views on a range of issues raised by UK implementation of the age strand of the Directive, including that of retirement ages. The consultation closed in October. The government said that it would develop the legislation once it had considered the responses to the consultation, and would consult on draft Regulations in the first half of 2004 (UK0312101N). Although the legislation will take effect in October 2006, the government’s aim is to lay it before Parliament by the end of 2004 'to give everyone affected by it plenty of time to prepare for their new rights and responsibilities'.

However, employers and age discrimination campaign groups are reportedly concerned that delays in the publication of draft Regulations may occur because of policy disagreements within the government. According to the Financial Times (on 24-25 April 2004), the Department of Trade and Industry (DTI) and the Department for Work and Pensions (DWP) take divergent views about the scope for employers to operate mandatory retirement ages for their employees under the new statutory framework.

Under the Directive, retirement ages set by employers will be unlawful unless objectively justified. In its July 2003 consultation document, the government sought views on whether and on what grounds employers should be able to justify mandatory retirement ages. It also asked for comments on introducing a default age of 70 at or after which employers could require employees to retire without having to justify their decision.

However, the Confederation of British Industry (CBI) and other employers’ groups are concerned at the prospect of employers’ losing the ability to set retirement ages for their staff. Pointing to the experience of the USA, the CBI is worried that eliminating retirement ages could result in a significant increase in litigation. The EEF manufacturers’ organisation advocates a default retirement age of 65. Ministers at the DTI are now reportedly sympathetic to employer arguments for a standard retirement age of 65, unless the employee wants to work longer and the employer agrees. However, DWP ministers are reported to oppose this approach, as do organisations such as the Employers’ Forum on Age, which argue that employees should be able to work for as long as they want to and are competent to do so.

This apparent impasse within the government may reflect concern that the retirement age issue could become a significant 'vote loser' for the government at the next general election. The proposals in the consultation paper for abolishing fixed retirement ages or introducing a default retirement age of 70 are thought to have raised fears among older workers. Some trade unions too are wary of their possible impact. The Trades Union Congress favours the elimination of state- and employer-prescribed retirement ages, but has warned that the upcoming legislation 'must not be used as an excuse to delay or downgrade entitlement to pensions and put pressure on people to work for longer against their wishes'.

According to a senior EEF official, David Yeandle, any delay in publishing draft age discrimination Regulations would be 'a very serious concern to employers'. Employers would need as much notice as possible 'to adjust to the significant change in cultural attitudes that [the new legislation] will require in the workplace'.