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New age is dawning
11:56am Thursday 14th April 2011 in Legal
Andrew Egan, an employment specialist with Wantage law firm Charles Lucas & Marshall, explains the impact on employers of the Government's plans to abolish the default retirement age
The default retirement age will be abolished from October 1 and employers have from this month to ensure they are prepared for the implications. Currently, employers are allowed to impose a ‘normal’ default retirement age and, provided they follow the proper procedures, they can terminate an employee’s employment at or after this age by reason of retirement.
This should not expose them to an unfair dismissal or unlawful age discrimination claim by the employee.
April 1 was the last date on which notices could be given under the previous statutory procedure.
Before then, an employer who received a request to continue working had to consider it in good faith.
The procedure did not require the employer to give reasons for retirement, but it was wise to do so, to reduce the risk of a successful unfair dismissal claim.
Using a default age will now be prohibited, unless an employer can justify doing so as a “proportionate means of achieving a legitimate aim.”
From October 1, employees who are compulsorily retired will be able to bring claims for age discrimination and unfair dismissal. Any decision to retire an employee must be objectively justified to avoid age discrimination.
The question of whether a retirement is objectively justified will depend on the specific business.
Tribunals may be prepared to uphold justifications based on the needs of the business, but the hurdle is likely to be high, and tribunals will closely examine the evidence.
Employers should follow a fair procedure to avoid unfair dismissal, and they should genuinely consider any request by an employee to continue working beyond retirement.
They will also need to consider their workforce as a whole — for example, in areas such as performance management, succession and workforce planning, and ensuring consistency and fairness in their policies and practices.
Removal of the default retirement age will have implications for all employees in terms of career expectations and advancement.
Employers will need to remember: n Workers can retire when they are ready to n Forcing retirement will only be possible if it is objectively justified n They must avoid discriminating against all workers on the grounds of age n The legislation applies to all employers and all company sizes and sectors n The changes do not affect an employee's state pension age and entitlements, which may well be different from the age at which they retire.
If an employer chooses to discuss retirement with an older worker, they should not leave themselves open to a claim of age discrimination, if properly handled.
An employer may reasonably want to know about an employee's future aims and aspirations. Employers should not single out older workers and, if they ask an older worker about their plans, it is good practice to also ask other younger workers about their future plans.
If an employer has a member of staff who may not be performing well, and was hoping to use the default retirement age to dismiss him or her on reaching 65, they will find it is not possible now.
An employer will need to use one of the reasons for fair dismissal, although a workplace discussion may help an employer better understand the employee's intentions regarding their retirement.
The Government sees the move as a way of tackling age discrimination and reinforcing the value of older employees in the workplace.
It is argued that retaining a skilled and experienced workforce who may not decrease in efficiency and productivity at or after 65, may benefit society, the economy and employers.
Conversely, business leaders and some lawyers have criticised the move to prevent employers forcing staff to retire at 65.
Business leaders are concerned the move will reduce the flexibility which employers have to dismiss under-performing staff, and that it will provide more work for employment lawyers.
They also argue that scrapping the default retirement age could lead to fewer incentives or opportunities to hire and train younger workers, or take on apprentices.
Under the new rules, workers will still be allowed to retire at 65 if they wish, but the changes raise the prospect of staff staying on into their later years.
Employers looking to deal with older employees and those approaching a contractual retirement age should take legal advice as soon as possible.
n Contact: Andrew Egan, Charles Lucas & Marshall, 01235 771234.