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Just over two weeks ago, on 1st October, the Default Retirement Age (DRA) in the UK was fully abolished after being phased out from April this year. New legislation now stops employers from compulsorily retiring workers once they reach the age of 65.
The charity, Age Concern, welcomed the legislation but said that age discrimination was still prevalent in the workplace.
However, research has shown that as many as one in ten companies plan to offer financial incentives to encourage workers to move on at a certain age.
The Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 started phasing out the DRA from April this year. That was the point after which employers could no longer issue the maximum six-month notification for compulsory retirement, using the DRA procedure.
If employers want to enforce retirement, their decisions will have to be objectively justified but workers can no longer be forced to retire on grounds of age alone. This will be deemed as age discrimination and, in line with other forms of discrimination, can lead to substantial awards in Employment Tribunals.
One of the problems seen by businesses is the potential blockage in the career paths of younger employees who would have been expecting to move up the career ladder when those reaching the age of 65 would previously have retired. Indeed, there is a school of thought that believes the whole recruitment chain will be affected resulting in a backlog at the younger end.
Furthermore, the removal of the DRA not only raises practical issues for employers in managing older workers but also has a potential impact across the workforce more generally in a wide range of areas such as succession and workforce planning, performance management and ensuring consistency and fairness in their policies and practices.
If an organisation wants to legally remove an employee that reaches the age of 65 then this will have to be done either through a performance management process or by virtue of them breaching the company’s disciplinary rules and being dealt with through a fair and robust disciplinary process.
The impact of the new rules is more likely to effect smaller companies that do not have their own HR function.
The Federation of Small Businesses, which is well represented in the Furness area, called the move “unnecessary meddling”. FSB spokesman, Andrew Cave, said “It will lead to a legal quagmire for a lot of business owners. If you can’t get rid of someone, then you have to go trough the process of performance managing someone out of an organisation which, if you have a big HR department and you’re experienced in these things, is easy”.
He went on to add, “The average business in the country employs four people. The owner-manager doesn’t necessarily have that expertise”.