What are the key changes?
- Where an employee is subject to a contractual retirement age below 66, they may formally notify their employer in writing that they do not consent to retiring at that age.
- Upon receiving such a notification, an employer must provide a reasoned written reply within one month, setting out the objective justifications for the contractual retirement age.
- An employer will only be permitted to enforce a contractual retirement age below the State pension age if:
- The retirement is objectively and reasonably justified by a legitimate aim; and
- The means of achieving that aim are appropriate and necessary.
- Employers who fail to comply risk being unable to enforce a contractual retirement age and may face significant compensation claims and criminal liability.
- The Act does not apply to employees who have not completed their probationary period, or who are subject to a statutory maximum retirement age.
What should employers do now?
Employers should act now if they haven’t already, particularly where their workforce is subject to contractual retirement ages below 66. Key steps include:
- Reviewing employment contracts and retirement policies
- Assessing workforce planning strategies
- Developing robust justification frameworks on an individual basis, ensuring that any mandatory retirement age can be objectively and reasonably justified with appropriate and proportionate means.
- Establishing clear internal processes for handling employee notifications and ensuring compliant written responses are issued within the one-month timeframe.
If you need support, please get in touch with a member of the MDR ONE team.
