When an employee retires

Retirement ages and procedures


Employees can generally retire when they want to.

Planning ahead

To help with your workforce planning, if you don't already do so, you should consider setting up regular individual informal workplace discussions with all employees.

Then, when you are having such discussions with older employees, you may get the opportunity to raise the issue of their future plans, which may include plans to retire.

However, any direct question such as "are you planning to retire in the near future?" is best avoided. If the employee indicates they wish to retire, there is no problem in you talking to them about the date of their retirement and any working arrangements leading up to it.

Retirement ages

You can only operate a compulsory retirement age if you can objectively justify it. Justification of direct age discrimination must be based in 'social policy objectives' such as those related to employment policy, the labour market or vocational training. This means that the aims must be of a 'public interest nature' rather than purely individual reasons particular to one employer's situation.

Compulsory retirement age

The first thing you would need to do is ask yourself why you need a compulsory retirement age. Set out your reasons clearly on paper.

You should then ask the following questions:

  • Do you have real hard evidence which can justify your reasoning or is it just based on a preference or assumption?
  • Are there easier, simpler non-discriminatory ways of achieving the same results?

As well as establishing a legitimate aim an employer would also need to demonstrate that the compulsory retirement age is a proportionate means of achieving that aim.

The test of objective justification is not an easy one to pass and it would be necessary to provide evidence if challenged at a tribunal (or under the Labour Relations Agency Arbitration Scheme which can now be used as an alternative forum for resolving disputes); assertions alone would not be enough.

Read further guidance on early retirement.

Read further guidance on working after State Pension age.

Retirement dismissals

If you do operate a compulsory retirement age that you can objectively justify, you must follow at least the minimum statutory disciplinary and dismissal procedure. This means:

  • giving the employee plenty of notice of the date you intend to retire them
  • arranging a meeting to discuss their retirement
  • considering any request they make to work beyond the compulsory retirement
  • allowing them an appeal if they do not accept your decision

You can also still dismiss an employee of any age on, for example, the grounds of:

Read more on dismissing employees.

Pay and pensions

Whatever date the employee retires, during the employee's final few weeks of work, you will also need to:

  • calculate their final payment - see pay: employer obligations
  • calculate any entitlements due under employee share or share option schemes - particularly relevant regarding early retirement
  • check the rules of their pension scheme - see pensions and retirement

Emotional and practical issues

Even though an employee can generally choose when to retire, preparing for retirement may still be a difficult time emotionally for them.

Therefore, you should consider helping them in the run-up to their retirement - see providing support for a retiring employee.

Remember that you may also need to retrieve company property, eg security pass, company car, laptop computer.