EDIT (thanks to users @jlliagre, @ Luke Sawczak, @ yagmoth555 for their feedback.)
You might have been confused by the non negligible number of occurrences of
il est retard
Google returns. User @jlliagre even found one in the "Grevisse de l’étudiant" 2017, missed by proofreaders… :
The expression is nevertheless invalid. While the en is unstressed and often no more nasalized (il est a r’tard), it is still there.
(2) The idiom
il est en retard
is correct and it conveys
he is late (speaking of someone) or it is late (speaking of something)
Être en retard is a set expression which can be conveyed in English by ‘to be late’. French only sometimes is conveyed word-by-word by a English structure. Conversely, English only sometimes is conveyed word-by-word by a French structure.
As another example, take être en congés (be on holidays). Yet another one, être en phase and so on.
I think être and retard (a noun) does not make sense. It is by en that the whole set expression conveys be late (late is an adjective here).
Être + noun only works for identity things, such as professions. "Il est médecin." Since retard means "delay", the construction would be ungrammatical. Even if être retard did work, it would apparently mean "He is a delay." (thanks @ Luke Sawczak).
il est retardé
can mean, depending on the context,
il est en retard dans son développement intellectuel.
he/it is delayed.
The usual sense is the latter one. The interesting point is the comparison between il est retardé and il est en retard. (thanks to user @jlliagre for the clarification)
The difference between "il est en retard" and "il est retardé" is that
in the former case, the expected time is over, or will be necessarily
over (it’s too late to be on time) while in the latter case, the
expected time hasn’t yet arrived. The person or object delayed might
even be able to catch up the delay.
One shouldn’t focus too much on the meaning "he is mentally deficient"
because it is anecdotal here and the context should clearly sort out
what is intended, not to mention it has no sense if "il" isn’t a
person but a train, a plane, a training, a Tour de France, whatever.
To further quote user @jlliagre:
C’est peut-être une influence de l’anglais où retard et retarded sont des insultes. En France, on dira plutôt attardé quand il s’agit de retard mental : Pierre est un attardé, il n’arrive pas… Le sens largement le plus courant de retardé correspond à l’anglais delayed.
and the comments following my answer.