MOST employers will by now be aware that, as of this year, it is illegal to “retire” employees simply because they have reached a certain age. Notification of retirement based on the “default retirement age” (DRA) of 65 may not now be issued (since 5th April 2011). This applies to large and small employers alike, and to employees and partners alike.
With the pension age for both state and private sector pensions likely to rise in response to the increasing costs of providing pensions, the abolition of the DRA is probably necessary and desirable. If we are all to be expected to wait before being entitled to draw our pensions, it follows that unreasonable barriers to us being able to earn a living should be dispensed with.
Further, since most of are, apparently, living longer, it may well be that those in their 50s and 60s now are, on the whole, fitter and healthier than those who were at the same age in years gone by.
For some employers, the abolition of the DRA may not present any practical problems – the Government claims that two-thirds of businesses already operate without a fixed retirement age. Some of these firms say that the situation works perfectly well on the basis that, generally speaking, their employees know for themselves when they are no longer able to carry on and when is the right time for them to leave.
But even if an employer has a workforce which can be relied upon to recognise for itself when the time is right for them to leave, it is now essential for the employer to exercise great care in planning for the parting of the ways. Failure to do it properly risks landing the employer with the cost and unpleasantness of dealing with an employment tribunal for unfair dismissal.
So what can employers do to mitigate the impact of this potentially difficult change? Here are some tips to help employers deal with the changed environment.
Can you claim exemption from the new rules?
First of all, it must be stressed that it is still legal to retire an employee lawfully at a set age if it counts as an Employer Justified Retirement Age (EJRA) – a set age which can be objectively justified as a proportionate response to a legitimate aim.
Cases where this exception will be allowed are likely to involve posts which require very high levels of physical and/or mental fitness, e.g. airline pilots and firefighters. Even where the EJRA is likely to be allowed though, employers should still make sure they follow a fair procedure, involving adequate notice and considering any request by an affected employee to work on.
How can you still dismiss an older worker?
It may be that employee performance in a particular job will decline as he or she gets older, though the decline will not necessarily coincide with a set age. The law recognises that an employer should still be able to dismiss an employee if he or she is, or becomes, unable to do the job he or she is contracted to do.
This is, therefore, a ground on which an employer can continue to base a decision to “retire” an older employee. However, the employer must still act fairly in doing this and must be able to base the dismissal on actual evidence of performance.
Accordingly, employers should ensure that their employment practices, including training and incentive arrangements, are properly thought through and performance reviewed and discussed with employees at regular intervals.
Fair treatment will invariably involve the employer explaining to the worker the reasons for his or her concern and setting out the expected improvements and timescale for this to happen. Failure to meet the targets will be followed by a first and then a final written warning, and if improvement is still not realised, disciplinary action and/or dismissal may be considered.
What employers should be careful to avoid is responding to poor performance by older workers more critically than in the case of younger workers (and vice versa).
If lower than expected performance by a person in his or her 60s is met with dismissal, but similar performance levels on the part of younger workers is not, then the dismissed worker could well bring a claim for unfair dismissal.
ACAS also makes the point that poor performance on the part of older workers should not be overlooked by the employer on the assumption that they will be leaving soon and do not need to address their shortcomings – this could become a factor in any subsequent tribunal claim.
How can you plan your future workplace needs?
Without a DRA, employers need to be prepared in advance for the potentially difficult discussion that
they may have to have with individual workers in due course. One way of preparing is to institute regular discussions with staff at which their performance, training needs and future plans are discussed together.
In doing this, care must be taken to avoid giving the impression that individual workers are being encouraged to leave. You should avoid asking pointed questions to older workers since this could be construed as being discriminatory in itself.
ACAS suggests asking open questions about employees’ plans in the short, medium and long term. As a result of this sort of process, employers may acquire a better idea of which staff members are hoping to retire at different times, thus helping the planning for future staffing and succession needs.
Indications not binding
Speaking about retirement plans at the same time as performance and training needs will also help the employer to make any necessary changes to the support available to the worker concerned.
But it is important to bear in mind that indications given by staff members about the date at which they plan to retire will not be binding and can only be indicative.
The removal of the DRA will inevitably mean that some practices and other businesses will be operating in a climate of some uncertainty for a period. Smaller firms may find this new situation more difficult to cope with than larger firms which will have in-house HR and legal advisers.
Until we have more clarity as to what the law recognises as best practice in this area, employers are encouraged to follow the basic steps set out above.
They should also consult the guidance produced by ACAS: Working without the default retirement age. This is available from www.acas.org.uk/publications.
