The Government has confirmed its intention to remove the DRA completely. This begins on 6th April 2011 and the DRA will be fully abolished on 1st October 2011.<\/p>\n
Summary of Changes<\/strong><\/p>\n From 6th April 2011 employers will not be able to issue any notifications for compulsory retirement using the DRA procedure. Between 6th April 2011 and 1st October 2011 any retirements notified before 6th April 2011 will still be allowed provided the procedures set out in the Employment Equality (Age) Regulations 2006 are correctly followed.<\/p>\n After 1st October 2011 employers will not be able to use the DRA to compulsory retire employees. The only exemption is if an employer is using an employer justified retirement age (EJRA).<\/p>\n An EJRA will be allowed for some or all staff on health or safety grounds or other objectively justified grounds. This is likely to be used by only a minority of employers which could include air travel controllers and police officers. There is currently no guidance on EJRAs although case law will develop once the DRA is abolished. The only fair grounds on which an employee can be dismissed is their performance so managing employee\u201fs performance properly will become more important for employers in the future.<\/p>\n Impact on Insured Group Risk Benefits<\/strong><\/p>\n The Government have announced it will introduce an exemption to the principal of equal treatment where Group Risk insured benefits are provided by an employer. This will permit these benefits to be withdrawn in line with the State Pension Age which will initially be 65 but will increase thereafter.<\/p>\n The Government have specifically mentioned the exemption will apply to the following benefits:<\/p>\n Although not mentioned it is anticipated this will also include critical illness insurance. In the Governments response to the consultation on the phasing out of the DRA they specifically recognise the importance of Group Risk insurance and said:<\/p>\n “The Government believes that it is in the wider interest that these benefits continue and wants to support the inclusiveness of Group Risk insurance where the spread of risk allows cover to be provided to individuals who might otherwise be unable to obtain cover or only get cover on unfavourable terms”. <\/span><\/em><\/p>\n “We believe that the safest way to guard against these benefits being either greatly reduced or withdrawn for those currently covered is to provide an exception. We therefore intend to introduce an exemption to the principal of equal treatment on the grounds of age where group risk insured benefits are provided by an employer. It will permit such benefits to be withdrawn which will apply initially to employees aged 65 and above and will rise in line with the State Pension age”.<\/em><\/p>\n Issues still to be clarified<\/strong><\/p>\n The response issued by the Government needs further clarity in the following areas. We are investigating and will provide updates in due course.<\/p>\n Considerations<\/strong><\/p>\n We would recommend that employers consider whether they wish to utilise the exemption and effectively withdraw the provision of benefits to persons aged above the State Pension age.<\/p>\n \u00a0W<\/span>e would recommend the following are considered when reaching any decision.<\/p>\n At this stage the cost of continuing life assurance benefits for employees who continue working beyond age 65 is not prohibitive although it is possible that as more employees continue working beyond the state pension age the costs will rise due to the increased risk associated to a larger number of older employees within the scheme.<\/p>\n It will be necessary to apply a consistent policy to avoid discrimination. If employers agree to continue insured group risk benefits for some persons working beyond the state pension age this would need to apply to all employees unless an employer justified retirement age is justifiable for certain types of employee.<\/p>\n It is anticipated the increased and sometimes prohibitive costs associated to extending income protection, critical illness and private medical insurance costs beyond age 65 will continue.<\/p>\n For further information the following links to the Department of Business, Innovation and Skills website which includes links to all relevant documents including ACAS guidance for employers.<\/p>\n\n
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