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The Default Retirement Age raises problems for employers

Employment Law - One-Day Seminar - £225 Per PersonThe Government confirmed on 13 January 2011 that the Default Retirement Age (DRA) will be phased out between 6 April and 1 October 2011. The Government believes that this will give greater freedom to individuals to choose when to stop working.

Employment Relations Minister Ed Davey said:

"Retirement should be a matter of choice rather than compulsion - people deserve the freedom to work for as long as they want and are able to do so. Older workers can play an incredibly important role in the workplace and it is high time that we ended this outdated form of age discrimination."

There are currently 850,000 people over the age of 65 still in work in the UK. OECD figures suggest that 1 in 10 of the UK labour force will be over 60 by 2030 . The state pension age will rise, for both men and women, to 66 by 2020.

Currently, employers are allowed to insist that employees retire when they reach the DRA for that organisation - usually 65 - provided that six months' notice is given in writing. Employees are allowed to request to work beyond 65 but there is no obligation on the employer to comply. The latest statistics available show that 81% of requests to carry on working were agreed to by employers.

From 6 April employers will not be able to give notice to retire under the DRA procedures. Between 6 April and 1 October only people who were notified before 6 April and whose retirement date is before 1 October can be compelled to retire. After 1 October employers will not be able to use the DRA to compulsorily retire employees.

The only exceptions to this rule will be where a retirement age can be objectively justified. The police or the air traffic control service may be examples of employers who could still justify a retirement age of 65 or lower.

Employers' organisations have expressed many concerns about the changes and there are certainly going to be challenges ahead for any organisation with members of staff approaching retirement age.

Employees can carry on until they decide to retire voluntarily or become subject to one of the fair reasons for dismissal. Fair reasons for dismissal include misconduct, incapability and redundancy.

Many employers have raised the fear that members of staff who have provided decades of loyal service to an organisation may suddenly find themselves leaving under a cloud.

Further concerns have been expressed that an increasingly older workforce will limit the number of job opportunities that can be made available to younger workers potentially leading to an increase in youth unemployment.

ACAS has issued the following advice for employers.

"The removal of the DRA not only raises practical issues for employers in managing the older worker but also across the workforce more generally with a wide range of areas such as succession and workforce planning, performance management and ensuring consistency and fairness in their policies and practices. It is important to remember too that the removal of the DRA will have implications for all employees in terms of career expectations and advancement."

UK Training's seminar, The Essentials of Employment Law, outlines the changes and provides advice on how employers and employees can manage both the transition stages and new procedures.

Whatever an employer decides to do, it is vital that it ensures that the way it treats older workers is not different to the way it treats other staff members. This could lead to a tribunal claim on the basis of age discrimination and discrimination claims can result in damages and costs of tens of thousands of pounds.

 

 


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