Government announces policy on age discrimination and retirement

In December 2004, ministers outlined how they propose to deal with the issue of employers’ mandatory retirement ages in the context of forthcoming UK legislation outlawing age discrimination. The government has decided to set a default retirement age of 65, but give employees the right to request to work beyond that age, which employers must consider seriously.

On 14 December 2004, the trade and industry secretary, Patricia Hewitt, and the work and pensions secretary, Alan Johnson, made a statement in Parliament outlining how the government proposes to implement the age discrimination provisions of the EU framework equal treatment Directive (2000/78/EC) (EU0102295F) in employment in relation to retirement ages set by employers.

After extensive public consultation and delays reportedly due to disagreements within the government (UK0405102N), the government has announced that it will:

• set a default retirement age of 65;

• create a right for employees to request to continue working beyond retirement age, which employers will have a duty to consider seriously;

• allow employers to justify objectively earlier retirement ages if they can show that they are appropriate and necessary; and

• review the proposed statutory requirements five years after implementation.

The 'right to request' approach is modelled on existing statutory provisions enabling parent of young or disabled children to request flexible working (UK0304104F and UK0312102N).

Mr Johnson said: 'By taking action against retirement ages below 65 we offer workers clarity and more choice: they will know that the law stands behind their right to continue working to 65. And the new right to request means that, should they want to work beyond 65, they will now be able to address this with their employer. While many firms still rely on mandatory retirement ages, an increasing number of employers are organising their workforce planning around the best practice of not having any fixed retirement age at all, and the five-year review of the retirement age will take account of these trends. Ultimately we look forward to a future where people have complete choice about when to stop working, and retirement ages become a thing of the past. If the formal review of the legislation suggests that we should abolish compulsory retirement ages, then that is what we will do.'

The proposals on retirement age received a mixed reaction. Employers generally welcomed the government’s approach. The Confederation of British Industry described the announcement as 'sensible and pragmatic. It means there is a clear cut-off point to employment, which is important if you don’t want to embitter the retirement process and trigger an explosion of tribunal claims.' The British Chambers of Commerce welcomed the proposals as 'the best of both worlds. Employers have the ability to define the end point of the employer-employee relationship and employees have flexibility with a right to request to work past the age of 65.'

Trade unions were less happy with the announcement. The Trades Union Congress said: 'We still do not have a clear date for ending age based retirement policies as the Directive requires. The right to work past 65 is welcome in theory, but in practice we are concerned that employers will find it too easy to say no, and the UK workforce needs a guarantee that no employee will lose out on pension arrangements as a result of these changes.' The campaign group Age Concern condemned the government’s decision as 'a complete U-turn' and said legal challenges under European law were 'inevitable'.

The government has said that a consultative draft of its age discrimination legislation will be issued in 2005. The legislation is due to come into force on 1 October 2006.