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Employers may still be able to make compulsory retirements

Employers may still be able to make compulsory retirements

Research by the Employment Law Advisory Services has discovered that more than 50% of SMEs, including accountants for contractors, are not prepared for the abolition of the default retirement age.

From the 1st of October this year, employers will not be allowed to make workers retire when they reach the age of 65.

The majority of firms are aware that the rule is about to change but a lot of them are still struggling with the application of the rules. Peter Mooney, the head of employment law at ELAS, said many firms haven’t thought through how they will be affected by the new law.

Businesses employing older workers could have to pay for expensive healthcare and death-in-service benefits and adjustments for disabilities, access requirements and risk assessments may need revising to suit the ageing workforce.

However, age campaigners claim that employers may be able to make compulsory retirements to keep costs down, after a recent ruling in the European Court of Justice.

The case concerned a German state prosecutor, Gerhard Fuchs, who was forced to retire when he reached 65. He was employed by the German state of Hessen, and compulsory retirement was part of a cost-saving policy. The ECJ ruled in the employer’s favour saying the need to keep costs down could be seen as justification for a compulsory retirement age.

Chris Ball, from The Age and Employment Network, explained that although the government has abolished the default retirement age, the ECJ has provided employers with “wriggle room” to justify compulsory retirements.

He went on to say that the ruling appears to mean that a compulsory retirement age can be justified in order to promote a younger workforce. Controversially, it also suggests it is legal to retire older member of staff to stop possible disputes about employees’ fitness to continue working once they reach a certain age. This could throw the door open for employers to retire older workers off early.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Closed road! by Paul G Newton

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