Wave of age discrimination cases looms after default retirement age is scrapped by Davey

Julian Harris
Follow Julian
EMPLOYMENT minister Ed Davey faced a barrage of criticism from business groups yesterday, as he announced that bosses will no longer be able to force staff to retire at 65.

Employers face a “seismic shift” in the law that could see unfair dismissal claims “go through the roof,” according to a leading City law firm.

The Confederation of British Industry (CBI) complained of the “timescale” of the measures, arguing that reforms to unfair dismissal law should have been made alongside changes to retirement age rules.

“There is not enough time for businesses to put in place new procedures,” said the CBI’s John Cridland. “The outcome will be more unpleasant and costly legal action.”

The maximum compensation for unfair dismissal is £68,400 (from 1 February), yet claims for discrimination have no ceiling.

An age discrimination claim can, like some sex discrimination cases, total millions of pounds.

“Firms can implement their own standard age of retirement, which they might have to justify in a court. Otherwise they can deal with each employee individually although this could involve very high HR costs, especially for small companies,” said Adrian Crawford of Kingsley Napley.

Adding to the uncertainty, age discrimination law was only introduced in 2006, so there are relatively few legal precedents, Crawford said.

The default retirement age will begin to be phased out between April and October of this year. If an employer has given notice of retirement before 6 April 2011 and the intended date of retirement is before 1 October 2011, the statutory retirement procedures will continue to apply.