Default Retirement Age: how does it affect your business?

The Default Retirement Age. This affects all of us. Or it will at some point in the future.

In July 2009, PM Gordon Brown announced the Default Retirement Age (DRA) would be scrapped. This ruling was upheld by the Coalition Government, and came into force on 6 April 2011. The government hopes the change will encourage people to work for longer.

The idea is that it will ease the strain on public finances as more people continue to pay tax, while at the same time claiming the state pension.

So how does this affect you – as a local business owner?

First, you need to be aware you cannot dismiss an employee simply because of their age. You need to objectively justify your reason for doing so – just like with any other employee.

You can, however, decide whether there are any roles in your organisation where a retirement age might be objectively justified. If so, you need to provide evidence to support this, and consider what age would be appropriate, and why.

Next, you need a review of your contracts and procedures to makes sure they are amended and up to date.

Any occupational pension scheme in your company needs to be explored, to find out if appropriate changes need making.

New policies and procedures for all employees are likely to be needed to help manage the mechanics of retirement in the future.

And finally, make sure all of your employees are aware of these changes. You can put together a communications campaign, and provide training programmes where necessary. Legally, each of your employees needs to know how they will be affected.