Employers could face a raft of age discrimination and constructive dismissal claims due to this week’s scrapping of the default retirement age (DRA), according to Thomas Bourne, employment lawyer at law firm Bond Pearce.

The new rules mean that from October employees can no longer be legitimately compulsorily retired using the DRA so the last date to provide six months’ notice under the Regulations will be 30 March 2011.

Transitional arrangements are in place to cover retirement of individuals before September 30 who have not been given notice by March 30 which involve giving short notice to the retiree and risking a claim for up to eight weeks’ pay.

Bourne says: “The confirmation by the Department for Business, Innovation and Skills that the DRA is being removed means that employers must take immediate action to protect themselves in the short term but also put appropriate measures in place to safeguard their businesses for the long term.

“Employers should analyse their workforces now to see if any 65th birthdays fall between now and 30 September and give notice as soon as possible if you wish to retire them.

“New contracts of employment will have to remove all reference to a compulsory retirement age and retirement policies will have to be overhauled not only to remove references to any normal retirement age but to provide an overview of an employer’s approach to retirement under the new rules.

“The government’s response to the consultation paper suggests that the first appropriate alternative is ‘open dialogue’ with employees to ‘gauge their aspirations.’

“This could end in substantial disharmony in the workplace, fallout and potentially age discrimination or constructive dismissal claims if overzealous managers have the wrong type of ‘open dialogue’ with older workers. As with many things, being prepared through training and awareness will be key.

“Companies will have to beef-up their capability policies and performance review procedures so that any dip in output from older workers is easily and comprehensively measured and can be the subject of performance review in a dignified and managed way.

“They will also need to give careful consideration as to whether a compulsory retirement age can be justified in the context of each role. This will be problematic especially before the courts start to interpret the new law as cases before them.

“Managing the age profile of a workforce will be particularly important for anyone planning to sell their business as, often, purchase prices reflect the demographic of the workforce so there are sound commercial, as well as HR, reasons for getting to grips with this.”