Retirement changes will have wide-ranging impact

David Poddington, Taylor&Emmet
David Poddington, Taylor&Emmet

On October 1 this year, the default retirement age will be abolished. This is where the certainty ends and, for most businesses, the hard work begins.

The last date on which employees could serve notice of their intention to retire has already passed, so the big question most firms now face is whether to keep a retirement limit (which could be 65 or any other age) or consign the whole notion to history’s dustbin.

Removal of the retirement age is probably the biggest single change to employment law in the last 10 years. It marks a fundamental shift in policy, promoting the right of employees to choose when to stop working, as long as they are still capable of doing their job. It is no coincidence that this reform comes against a backdrop of greater life expectancy, increases in the state pension age and an economic imperative for employees to work longer.

This does not mean that businesses cannot justify retaining a retirement age. Case law relating to partners in professional practices gives some encouragement that this remains a genuine option – there has been no default retirement age in this sector since age discrimination laws came into force.

The first step for employers is to identify a legitimate aim that they hope to achieve by imposing a retirement age. ACAS identifies examples of legitimate aims as workforce planning (the need for businesses to recruit, retain, provide promotion opportunities and effectively manage succession), or the health and safety of individuals, their colleagues and the general public. Businesses then need to demonstrate that a retirement age is a proportionate means of achieving this legitimate aim. This is a difficult task, but not impossible.

Organisations that choose to abandon a retirement age will still need to review their policies and practices. How many employers shy away from formal performance management of older staff on the basis that the employee in question is due to retire? This will have to change, but businesses need to ensure they do not go too far in the other direction.

An employer who keeps an eagle eye on the perceived deterioration in performance of a 70 year-old, but who excuses similar failings in a 17 year-old “learning their trade,” will most likely be guilty of age discrimination.

The best defence against tribunal claims will be documentary evidence to support decisions taken by employers that meets the standards demanded by the age discrimination legislation.

To help organisations respond to the removal of the default retirement age, Taylor&Emmet is hosting a free breakfast workshop at the Leopold Hotel on May 26. Places are limited, but can be reserved by calling Claire Petty on the number below.

If you would like to discuss how the changes to the retirement legislation will impact on your organisation, contact Taylor&Emmet’s employment team on (0114) 218 4000 or visit tayloremmet.co.uk