Page last updated at 10:56 GMT, Friday, 25 September 2009 11:56 UK

Q&A: Retirement ruling

Old shop worker
The ruling means people can be forced to retire when they hit 65

The High Court has ruled that employers can force workers to retire at the age of 65.

The decision follows a challenge by Age Concern and Help the Aged. They claimed the legislation failed to interpret an EU Directive against age discrimination correctly.

Why is the case important?

A mandatory retirement age of 65 was brought in in October 2006, when new laws on age discrimination were brought into force.

Under the Employment Equality (Age) Regulation, an employer could force an employee to retire or refuse to employ them beyond that age without giving a reason. Employers can also refuse to take on anyone above the age of 65.

"Age discrimination legislation has the biggest social impact change of any discrimination legislation as it affects everybody," says lawyer Michael Farrier at Boyce Turner.

Age Concern estimates that more than 10,000 people are forced to retire each year because of their age.

What does the High Court's decision mean?

The ruling means that the default retirement age will now stay in place.

As a result more than 260 tribunals brought on the grounds of age discrimination are likely to be be dismissed.

Charities Age Concern and Help The Aged - now merged as Age UK - said it could leave such workers in financial difficulty as many had opted to work longer to secure a decent retirement in the face of recession and a drop in returns on savings and investments.

What does the ruling mean for employers?

Most employers are likely to welcome the decision as it should make it easier for them to plan for their future.

The Federation of Small Businesses said the ruling should save costs in the event of any dispute over retirement ages as companies will no longer have to spend time and money on complying with the legislation - and they avoid potentially costly tribunal claims in future.

Research also suggests more firms will use the mandatory retirement age to cut their workforce during the recession.

However, some companies have also expressed concerns that implementing a default retirement age has also led to a loss of knowledge and talent among their workforce.

What happens next?

While the High Court may have thrown out Age UK's challenge, the group is still hopeful of a change in future, and have vowed to step up their fight "to get this outdated legislation off the statute book".

But the group has decided not to appeal the decision as they are "heartened" by comments from the judge in the case and the fact that the Government has already brought forward a review of the legislation by a year to 2010.

Mr Justice Blake, who ruled on the case, made it clear that forcing people to retire at 65 was unsustainable and needs reviewing.

He added that if the government had not already ordered an examination of the issue then he would have forced their hand.

"I cannot presently see how 65 could remain as a DRA (Default Retirement Age) after the review," Mr Justice Blake said.

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