You have to write to them, no more than one year and no less than six months in advance of the planned retirement date, to tell them what it is, and to notify them of their right to ask to work longer. If they exercise that right, you have a 'duty to consider' their request (see question 22, below).
If neither side raises the issue of retirement on the approach to retirement age, the employee is entitled to assume that the employment is continuing. If you tell an employee that they are due to retire within six months of the retirement date, they can ask for compensation (of up to eight weeks' pay). If you then neglect to inform them of the right to request to work longer, it automatically becomes a matter of unfair dismissal.
Whether or not you stick to the correct procedures, if the employee is of the opinion that the 'retirement' is actually a redundancy, or a dismissal for another cause, they are entitled to challenge it as an unfair dismissal. If the Employment Tribunal agrees with them, you could get landed with paying a basic award of up to £9,900, plus compensation of up to £63,000.
