1,500+ Business Documents

< Go back

Topic: Contractual clauses

retirement clause
File size:

# Pages:

Retirement clause

Retirement clause

Our retirement clause states that you do not operate a normal retirement age and therefore employees will not be compulsorily retired on reaching a particular age. Instead, employees can choose to voluntarily retire whenever they wish. This follows on from the abolition of the default retirement age.

Abolition of the DRA

Where you wished to compulsorily retire an employee on their contractual retirement age (or on or over the default retirement age (DRA) of 65 if you hadn’t set a specific contractual retirement age), you used to have to follow a detailed statutory retirement procedure to effect that retirement. However, the government has abolished both the DRA and the statutory retirement procedure and you can no longer use the DRA to compulsorily retire employees.

Thus, with the abolition of the DRA (in circumstances where there is no objectively justified compulsory retirement age), employees have a choice whether to work longer and you are not permitted to dismiss them just because they have reached the age of 65. You would therefore need to point to some other potentially fair reason to dismiss, and follow a fair procedure, avoiding age discrimination.

No compulsory retirement age

As a result of these changes, our Retirement Clause simply states that you do not operate a normal retirement age and therefore employees won’t be compulsorily retired on reaching a particular age. Instead, they can choose to voluntarily retire at any time, provided they give you their required period of notice of termination of employment. If an employee wants to retire voluntarily, that amounts to a resignation, not a dismissal. In this scenario, if the employee asks to retire, simply request the employee to formally confirm their wishes in writing.

Objectively justified retirement ages

However, even though the DRA has been abolished, it is still possible for some employers to continue to operate a compulsory retirement age, provided always that they can objectively justify it, which will be extremely difficult to do in other than very exceptional cases. Examples could include air traffic controllers and emergency services workers. We’ll need to await further case-law to see what tribunals think will amount to objective justification of a compulsory retirement age. If you think you can objectively justify retaining a compulsory retirement age, you’ll need to amend the clause accordingly.



© Indicator - FL Memo Ltd • Telephone: (01233) 653500 • Fax: (01233) 647100 • customer.services@indicator-flm.co.uk • www.indicator-flm.co.uk
Calgarth House, 39-41 Bank Street, Ashford, Kent TN23 1DQ • VAT GB 726 598 394 • Registered in England • Company Registration No. 3599719