At a time when people are living longer, and with cost of living pressures pushing more to work beyond pensionable retirement age, employers may be looking for ways to facilitate a fuller working life for their employees, both before any decision has been made to retire, and in the run up to retirement where the employee has made the decision to leave.
The following guide to the retirement procedure for employers looks at the legal obligations surrounding this process, together with best practice advice for managing older employees in a fair and non-discriminatory way — plus practical tips for positive employee engagement.
Section A: Law on Retirement Age
Since the abolition of the default retirement age, retirement is no longer triggered automatically by age. Employers therefore need to be clear about when retirement is lawful, when it is not, and where discrimination risk arises.
1. Is there a retirement age in the UK?
For most jobs, there is no longer a fixed, legal retirement age. In limited circumstances, upper age limits are set by statute or specific regulatory frameworks, for example in certain roles within the police, armed forces or other safety-critical services. However, following the abolition of the default retirement age of 65 in 2011, the majority of employers are no longer allowed to forcibly retire employees, or even pressure them into taking retirement.
This means that an employee doesn’t necessarily need to retire when they reach state pensionable age, and even though eligibility for any work pension will be set by the company’s occupational pension scheme, most employees are entitled to decide when to retire. Employment may only be terminated by the employer for a fair reason and following a fair procedure, such as capability, redundancy or misconduct.
2. Can an employer force an employee to retire?
Following the removal of the default retirement age, employers will rarely be able to require retirement simply because an employee has reached a particular age. Treating someone less favourably because of age can expose an employer to claims under the Equality Act 2010. The legal risk is not limited to formal dismissal. Conduct that pressures an employee to retire, or that creates an environment where the employee feels forced to leave, can also create exposure.
3. When can a compulsory retirement age be lawful?
A compulsory retirement age may still be lawful in limited circumstances, but only where it can be objectively justified. This requires the employer to show that applying a retirement age is a proportionate means of achieving a legitimate aim. In practice, this is difficult to evidence in most roles and most sectors, which is why compulsory retirement ages are now rare outside specific statutory or safety-critical contexts.
Section B: Retirement Legal Risks for Employers
By law, an employer is under a statutory duty not to directly or indirectly discriminate against an employee by reason of their age, either by deliberately treating them less favourably in the workplace or inadvertently putting them at a disadvantage. All employees, young and old, are afforded protection against age discrimination in relation to various key areas of employment, including retirement for older employees.
Under the Equality Act 2010, employers are also under a duty not to harass or victimise someone for a reason connected to retirement. This means that an employee will be protected against unfair treatment at work, such as ageist remarks or discriminatory actions, including if this leads to either forced resignation or a decision to dismiss the employee, if they’ve opted not to retire at a certain age.
For employees who are not yet ready to retire, assumptions should not be made by employers about the abilities of an older worker to learn new skills. Employers must therefore ensure that older employees continue to be offered any training opportunities available to other staff.
If an employee is treated less favourably, or subjected to a detriment, by reason of their age, an employer may find themselves facing a tribunal complaint for unlawful discrimination under the 2010 Act.
Where an employer has forced an employee into retirement, or the employee has been dismissed because of their age, in circumstances where this cannot be objectively justified, they may face claims for age discrimination and, where qualifying service applies, unfair dismissal or constructive dismissal.
Equally, for employees who have raised the possibility of retirement with their employer, all available career options should be explored, including phased retirement. Adopting a flexible approach to retirement can offer several advantages, not only for employees, but also for employers, from helping with succession planning to ensuring that the business continues to benefit from the skills, knowledge and experience of an older employee for just that little bit longer.
In theory, employers may be able to set a compulsory retirement age, but only where they can legally prove the need for an upper age limit in the context of their business. The employer must be able to show that this is a proportionate means of achieving a legitimate aim, for example, for health and safety reasons in a role that requires high levels of physical fitness and agility.
As legally proving the need for a retirement age can be extremely difficult to do, few employers will seek to prescribe the age at which their employees should retire. An employer may manage capability concerns in the usual way and, if appropriate and following a fair procedure, dismiss for capability.
Section C: Retirement Procedure for Employers
Once the legal position is understood, employers need to know how to manage retirement in practice. There is no statutory retirement procedure in the UK, but there is a clear framework within which discussions and decisions must take place. The way conversations are initiated and documented will often determine whether the process remains compliant.
1. When can a retirement conversation take place?
Where a set retirement age is not specified by way of a strict occupational requirement or, in rare cases, prescribed by the employer, it will be a matter for the individual employee to decide when they want to retire. If an employee raises with their employer or line manager that they’ve been considering the possibility of retirement, for example, during an appraisal or one-to-one, only then can discussions be entered into with the employee about how this will happen. The employee should raise retirement voluntarily. Employers should avoid prompting or directing retirement discussions in a way that could amount to age-related pressure.
In most circumstances, employers should avoid doing the following:
a. raise or prompt any discussion about when an employee might retire
b. ask an employee questions around when they might be planning to retire
c. suggest that an employee retires, either directly or indirectly, including making any suggestions that they go part-time or switch to another role because of their age
d. put pressure on an employee to retire or force them into retiring, for example, through coercive conduct, or via any other direct or indirect means, including encouraging the idea
Only once the topic of retirement has been raised by an employee can any discussion be entered into about leaving dates and the types of working arrangements leading up to it.
2. What is the correct retirement procedure for employers?
There is no statutory retirement procedure in the UK. However, once an employee has confirmed their intention to retire, employers should follow a structured and consistent process to reduce legal risk and ensure a smooth transition.
A typical retirement procedure for employers will involve:
a. Confirming in writing that the employee has indicated their intention to retire, including the proposed leaving date.
b. Clarifying contractual notice requirements and confirming whether notice will be worked.
c. Reviewing final pay, accrued but untaken annual leave and any outstanding entitlements.
d. Planning knowledge transfer and succession arrangements.
e. Signposting the employee to relevant pension scheme information and administrative processes.
This approach helps demonstrate that the decision was employee-led and that the employer has acted consistently and lawfully.
3. What should a workplace retirement policy cover?
In circumstances where an employee has initiated a discussion about retirement, the employer or line manager can begin to talk openly with that employee about the potential options available to them, such as full or partial retirement, and the procedures involved. Ideally, any options and procedures should be set out within a written retirement policy.
A workplace policy on retirement will help to provide clear guidance for both managers and employees on how retirement will be dealt with, and what steps can be taken once the issue has been voluntarily raised.
A well-drafted retirement policy will typically cover:
a. Confirmation that there is no default retirement age (unless objectively justified in specific roles).
b. Guidance on how and when retirement discussions may take place.
c. Notice requirements and confirmation procedures.
d. Phased or flexible retirement options, including links to a flexible working policy.
e. Administrative steps relating to final pay and pension signposting.
f. Reference to equality obligations and the prohibition on age discrimination.
The policy, where applicable, should also make it clear that any decision to retire is for the employee to make, regardless of state pension age, subject to contractual notice.
Section D: Best Practice for Employers
Given the potentially serious consequences around mismanagement of older employees in the context of retirement, it’s important that employers take proactive steps to minimise the legal risks of getting this wrong. In addition to putting in place a written retirement policy and procedure, there are a number of ways in which employers can help to ensure that employees nearing retirement age are treated fairly, and not discriminated against, because of this.
1. How can employers use phased retirement lawfully?
Phased retirement refers to the implementation of various different flexible working arrangements to ease the transition for an employee from working full-time to giving up working life altogether. A phased retirement approach is commonly used as a human resources tool to allow full-time employees to adopt a flexible working policy, by working part-time, or changing their working pattern or otherwise reducing their workload, while beginning to draw retirement benefits.
By providing employees with greater choice about how they manage their retirement, such as gradually cutting back on their hours or amending their duties, this can help to provide a positive and supportive environment in which retirement can be discussed. Ideally, these options should be clearly set out within any workplace retirement policy, making it clear to employees that, where operationally feasible, arrangements will be considered once a decision to retire has been made.
Many occupational retirement schemes make express provision for partial drawdowns to facilitate the transition into full retirement. Employees may also choose to defer claiming the state pension in accordance with current government rules. The range of phased retirement options can vary depending on the nature of the employee’s role and any occupational pension scheme in place, so employees should be signposted to the appropriate scheme information so that they can make informed decisions around their retirement.
2. How should employers use appraisals without creating age risk?
Formal appraisals are an effective way of identifying an employee’s future work plans for succession planning purposes. Even though an employer cannot lawfully raise the issue of retirement, or ask direct questions around an employee’s retirement plans, they can ask about an employee’s aims and ambitions in the short, medium and long-term. These discussions provide an opportunity for the employer to understand workforce planning needs without encouraging or steering an employee towards a retirement decision.
During the course of an appraisal, it is good practice to ask open-ended questions designed to prompt broader career discussions, such as where the employee sees themselves over the next few years. Different sets of questions should not be used for employees of different ages, as this treatment may be construed as discriminatory in itself.
Only once the topic of retirement has been raised by the employee can any discussion be entered into about leaving dates and the types of working arrangements leading up to it. The distinction between lawful workforce planning and unlawful retirement prompting is often critical in discrimination claims.
3. Why is equality and diversity training essential in retirement management?
Anyone responsible for dealing with employee appraisals, or otherwise tasked with addressing issues around retirement, should be appropriately trained. This helps to minimise the risk of employees feeling pressured into a retirement decision and reduces the likelihood of age-related assumptions influencing management decisions.
Age equality and diversity training helps managers understand that older employees are protected in the same way as younger employees. An employee must not be treated less favourably because they have chosen not to retire, or because they have indicated that they are considering retirement. For example, denying training opportunities or promotion on the assumption that an employee will soon be leaving may amount to unlawful discrimination.
4. How should employers use grievance and disciplinary procedures in retirement disputes?
In cases where an employee believes that they have been subjected to unfair treatment for a reason connected to their age, or where ageist comments or discriminatory conduct are alleged, there should be a suitable procedure in place for filing a formal complaint. Employees should be encouraged to follow this internal process before matters escalate externally.
Resolving issues through formal grievance procedures can help employers identify the root cause of retirement-related concerns and take corrective action. In appropriate cases, disciplinary action may need to be taken against managers or colleagues where discriminatory language or behaviour has occurred. Applying formal procedures consistently supports a fair working environment and reduces the risk of tribunal proceedings.
Section E: Summary
In summary, the issue of retirement should largely be one that is led by the employee, unless a compulsory retirement age can be objectively justified, or the employer faces a range of legal risk. When dealing with retirement procedures, employers will need to comply with their legal obligations in areas such as age discrimination, and providing adequate notice. Planning ahead, including managing knowledge transfer and addressing pension arrangements, can also significantly reduce disruptions and support both retiring employees and the organisation. By following best practices and adhering to legal requirements, businesses can handle retirement transitions efficiently and maintain a positive work environment. Regularly reviewing and updating retirement procedures ensures ongoing compliance and prepares the organisation for future changes.
Section F: Need Assistance?
Our employment lawyers can help with all aspects of workforce management and planning, including guidance on retirement procedures, settlement agreements and contentious exits. Working closely with our specialists in HR, we provide comprehensive advice on the options open to you as an employer and practical support through discussions to minimise legal risk through the retirement process. For help and advice with a specific issue, speak to our experts.
Section G: Retirement Procedure FAQs
Can an employer force an employee to retire in the UK?
There is no default retirement age in the UK. An employer can only require retirement if it can objectively justify a compulsory retirement age as a proportionate means of achieving a legitimate aim. In most workplaces, retirement must be employee-led.
When can an employer discuss retirement with an employee?
An employer should only discuss retirement once the employee has raised it voluntarily. Prompting or steering an employee towards retirement because of age may amount to discrimination. Workforce planning discussions must be handled carefully and consistently across all age groups.
Is retirement treated as resignation?
In most cases, yes. Where an employee chooses to retire, this is treated as a resignation. Contractual notice requirements apply, and final pay, accrued holiday and benefits should be processed in the usual way.
What should a retirement procedure include?
Although there is no statutory retirement procedure, employers should follow a structured process. This typically includes written confirmation of the employee’s intention to retire, notice arrangements, final pay calculations, knowledge transfer planning and pension signposting.
How much notice is required when an employee retires?
Notice requirements depend on the employment contract. If the contract does not specify notice, statutory minimum notice applies. Retirement does not create a separate notice regime.
Can an older employee be dismissed for capability instead of retiring?
Yes, provided there is a genuine capability issue and a fair procedure is followed. Age alone is not a fair reason for dismissal. Employers should manage performance concerns in the same way as for any other employee.
What are the main legal risks in retirement management?
The primary risks are age discrimination and unfair dismissal claims. Liability often arises where retirement discussions were prompted by the employer, where assumptions were made about age-related performance, or where processes were handled inconsistently.
Section H: Glossary
| Term | Definition |
|---|---|
| Retirement Procedure | The process an employer follows when an employee chooses to retire. |
| Age Discrimination | The unfair treatment of employees based on their age, which is prohibited under UK employment law. |
| Notice Period | The amount of time an employee or employer must give before ending employment or retiring, as specified in the employment contract or company policy. |
| Succession Planning | The process of preparing for the replacement of employees who are retiring or leaving, ensuring that their duties are covered and knowledge is transferred. |
| Flexible Retirement | A request by an employee to alter their working hours or conditions as they approach retirement, potentially allowing for part-time work or gradual retirement. |
| Pension Arrangements | The plans and schemes in place for providing financial support to employees after they retire, including contributions and final settlements. |
| Knowledge Transfer | The process of passing on skills, experience, and information from a retiring employee to other staff members to ensure continuity and minimise disruption. |
| Retirement Notification | Formal communication from an employer or employee regarding the planned retirement date and related procedures. |
| Final Settlement | The process of concluding any outstanding payments or entitlements to an employee upon their retirement, including any accrued benefits. |
| Administrative Tasks | The various paperwork and procedural steps required to finalise an employee’s retirement, including updating records and handling final payments. |
| Legal Compliance | Adhering to employment laws and regulations related to retirement, such as avoiding age discrimination and fulfilling notice period requirements. |
| Farewell Arrangements | Activities or events organised to mark the retirement of an employee, which may include farewell parties or presentations. |
| Retirement Benefits | Financial and non-financial benefits provided to employees upon retirement, including pensions, bonuses, or other retirement-related perks. |
| HR Advisory Services | Professional services offering guidance on human resources matters, including retirement procedures, legal compliance, and best practices. |
Section I: Additional Resources
ACAS – Advisory, Conciliation and Arbitration Service
https://www.acas.org.uk/retirement
ACAS provides comprehensive guidance on retirement procedures, including legal requirements and best practices for employers.
GOV.UK – Retirement and Pensions
https://www.gov.uk/retirement
The UK Government’s official website offers information on retirement age, pensions, and legal obligations for employers.
Pension Wise – Retirement Guidance
https://www.pensionwise.gov.uk
Pension Wise provides free, impartial guidance on pensions and retirement planning. Their resources can help both employers and employees understand pension options and retirement planning.
Chartered Institute of Personnel and Development (CIPD) – Retirement Planning
https://www.cipd.co.uk/knowledge/fundamentals/emp-law/retirement
CIPD provides resources and best practices on managing retirement procedures and planning for employee transitions.
The Pensions Regulator
https://www.thepensionsregulator.gov.uk
The Pensions Regulator offers guidance on pension schemes and employer responsibilities regarding pensions and retirement planning.
