As discussed in our last e-bulletin, employers at present can choose to compulsorily retire employees once they reach 'normal retirement age' provided a specific retirement procedure is followed. The vast majority of organisations who responded to our survey advised that their 'normal retirement age' is 65. If an employer sets its normal retirement age below 65, they must be able to objectively justify that decision. If an employer does not specify a normal retirement age, the default age of 65 will be the normal retirement age for that employer.

The current position is as follows:-

  1. Employees can choose to retire at normal retirement age (usually 65) or earlier if they wish to do so;
  2. If an employer and employee agree, an employee can continue working beyond normal retirement age;
  3. If an employer wishes to force an employee to retire once they reach normal retirement age, they may do so (provided the employer follows a set procedure).

The government is reviewing the position as regards point (iii) above and it is likely that, in the future, employers will no longer be permitted to compulsorily retire employees at 65. Forced retirement may be outlawed altogether, or may only be permitted once an employee reaches perhaps 68, or 70.

Our survey posed a series of key questions on the subject, which yielded some interesting results:

  • Nearly 90% of respondents have set a normal retirement age, with the vast majority setting this at age 65.
  • Around one third of respondents never receive requests to work beyond normal retirement age; but one quarter receive such requests 'often'; and 40% 'sometimes'.
  • 65% of you felt that employers should not be able to force employees to retire at 65; but over 70% did not want to see compulsory retirement outlawed entirely.

We also asked for your general comments, and the views that emerged were equally intriguing:

  • Compulsory retirement should be retained as an option for employers, for business planning purposes and to allow 'fresh blood' to enter and progress through organisations, as this encourages innovation, business renewal and the ongoing development of expertise.
  • Compulsory retirement should be retained as a means of dealing with under-performance among older employees. Two respondents highlighted a desire to retain the experience of older workers but, generally speaking, under-performance among older employees emerged as a key concern, despite studies endorsed by CIPD finding that younger and older workers are on average equally effective in their work.
  • Employees at or nearing retirement may prefer the option of flexible working, such as on a part-time basis.
  • As we now live longer, we must work and contribute to the economy for longer. As such, a higher default retirement age could have benefits. Although respondents did urge that legislation should allow for flexibility to meet changing circumstances in the wider economy, and the needs of individual employers and employees.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.