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We asked Joanne Kavanagh, Head of Employment at Morrisons Solicitors LLP how employers are dealing with the abolishment of the default retirement age?
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Why was the default retirement age abolished? The age discrimination regulations provided that it was not unlawful to retire an employee aged 65 or older (the Default Retirement Age) so long as the statutory requirement procedure was followed. Following a long promised review in 2010, the Government repealed the Default Retirement Age because people are living and working for longer to save for retirement. There were also concerns that the procedure to request working beyond retirement was too onerous on businesses. As a point of interest - the very last date on which an employee could request retirement under the old rules was 4 January 2012. It is now unlawful to force employees to retire just because they reach 65 or any set age unless there is objective justification for doing so. Of course employees can choose to retire and this is a matter for them providing they give the correct notice of their resignation from employment. Does this mean we cannot retire our employees at all? You can still compulsorily retire employees where objectively justified i.e. that the particular age at which you want to retire employees, is for a legitimate business/public policy aim. We have limited case law in this area as yet, but such aims are likely to include workforce planning, promoting and retaining younger employees and protecting the dignity of older
employees by not forcing them to undergo performance management procedures (although there is an argument that such grounds are themselves potentially discriminatory). Many employers are taking a cautious approach and rather than compulsorily retiring employees and risking tribunal claims of unfair dismissal and/or age discrimination from older employees, are allowing them to work on beyond what would have been the normal retirement age. Such claims are also likely to be potentially for higher awards at tribunal as older employees may be paid larger salaries and are likely to find it difficult to obtain another job. What if I have concerns about older employees’ performance or want to find out about their retirement plans? This repeal in the law presents new opportunities and challenges for businesses and their employees. Some employees will continue to choose to retire voluntarily, but with growing numbers of employees working for longer, employers are already having to deal with issues arising in an ageing workforce. Some suggested steps to provide some certainty to businesses and avoid tribunal claims, include: • Having regular discussions with your employees of all ages asking questions about their short, medium and long term plans e.g. in the appraisal. Whereas this discussion would, prior to the legal changes, normally be had pre-retirement, now singling out older employees, particularly those who may not be intending to retire to discuss their retirement plans, may well be perceived to be discriminatory. These regular discussions can also assist in workforce planning and managing the
promotion expectations of junior employees. • Not making stereotypical assumptions about older people that they are slowing down, or no longer up to their jobs because of age. • Addressing poor performance and sickness absence, regardless of age. Avoiding a formal procedure because of well meaning concerns about an older employee’s dignity can lead to a successful unfair dismissal and/ or age discrimination claim. In one case an employee who was invited to apply for early retirement as an alternative to formal capability proceedings succeeded in a claim of age discrimination. • A Retirement Policy setting out a commitment to treating all employees fairly and without discrimination. Employees contemplating retirement can be offered a change in role or, reduced hours (which they may be reluctant otherwise to raise). • Reviewing your insured employee benefits such as life assurance and private medical insurance which are exempt from the anti-age discrimination rules and can cease at age 65 (or the state pension age if older) subject to any contractual obligations.
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