Default Retirement Age and 1 October Changes

Default retirement age

Last week’s ruling that the default retirement age of 65 (under the Employment Equality (Age) Regulations 2006) is lawful will have been welcomed by employers. However, there is a sting in the tail.

The court held that the regulations had legitimate policy objectives and were proportionate in their effect. The policy aims were to maintain confidence in the labour market and facilitate workforce planning. The choice of the age of 65 had to be considered according to the state of affairs in 2006 when age 65 had support from past practice in the UK, no one was making a case for age 68 and a higher default age commanded little support in the consultations.

The Judge concluded,“ in the light of changed economic circumstances and the generally recognised problems that a longer living population creates for the social security system the case for advancing the default retirement age beyond 65 at least would seem to be compelling.”

Employers can rely on the current legislation for the time being. Nevertheless they should expect that the present state of affairs will not survive the 2010 review. The judgment provides a boost to raising or abolishing the default age.

1 October 2009 changes

There are minimal legislative changes affecting employers from 1 October. The most symbolic one is that the Supreme Court will replace the House of Lords as the highest appeal court in the UK.

A week’s pay for the purpose of calculating statutory redundancy pay and employment tribunal awards will increase from £350 to £380. This amount will then remain unchanged until February 2011.

Employers will no longer be able to count service charges, tips and gratuities processed through their payrolls towards payment of the National Minimum Wage. This increases as follows:

£5.80 Standard rate (workers aged 22 or over)
£4.83 Development rate (workers aged between 18-21)
£3.57 Young workers rate (workers under age 18 but above compulsory school age who are not apprentices)

From 1 October there is to be a new fee structure for notification to the Information Commissioner’s Office by data controllers under the Data Protection Act 1998. At present there is a current flat fee of £35. This is to be significantly increased for larger organisations. Data controllers with an annual turnover of £25.9 million or more and 250 or more members of staff (which includes employees and workers) will have to pay renewal notification fees of £500. There are some exceptions for charities and small occupational schemes. Most other data controllers will continue to pay £35.

From 12 October the Vetting and Barring Scheme will come into force introducing a centralised vetting and barring system for people working with children and vulnerable adults. It is designed to ensure that anyone who presents a known risk to vulnerable groups is prevented from working with them. On 12 October the 3 current barring lists (POCA, POVA and List 99) are to be replaced by 2 new lists: the new “Childrens” and “Vulnerable Adults” lists. From 26 July 2010 those people who apply to work or volunteer with children or vulnerable adults will have to apply to be ISA (Independent Safeguarding Authority) registered.