The law on age and retirement is changing. The Government is phasing out the default retirement age (DRA) from April 2011. This guide will help you understand what you need to know.
How will the phasing out affect both employers and agencies?
From 6 April 2011, subject to Parliamentary procedures, employers will no longer be able to issue notifications of retirement using the DRA procedure. In certain cases it might be possible for an employer to justify a retirement age but in order to do so they would need to show that the retirement can be objectively justified in their particular circumstances and would need to be able to defend the age limit if challenged at tribunal.
Two-thirds of businesses already operate without a fixed retirement age. Offering employees the choice to work on and providing flexible working options around retirement can help retain skilled and experienced people. Many employers report that it can have a positive effect on productivity. Older employees can bring valuable experience and knowledge to a business. They can use their know-how to train and mentor less experienced colleagues, and may welcome the opportunity to work more flexibly to cover extended or unsocial business hours.
What guidance will be given to recruiters and employers in getting ready for the change?
To help employers adapt to the change, the Government has worked with the Advisory, Conciliation and Arbitration Service (Acas) on new comprehensive guidance and the Department for Work and Pensions (DWP) has published Age Positive guidance setting out how many employers manage without fixed retirement ages and benefit from the employment and retention of older workers.
ACAS guidance on the retirement process is available on www.acas.org.uk/retirement
DWP Age Positive guidance is available on www.businesslink.gov.uk/agepositive
What do you need to know?
• The last day on which you can issue retirement notices using the DRA procedure to your staff is 5 April 2011.
• From 6 April, you will no longer be able to issue a notification of retirement using the DRA procedure. Short notice (two weeks’) notifications will also be removed from this date.
• If notifications have already been made before 6 April following the DRA procedure, you will be able to continue with the retirement process provided that the employee is at or over the age of 65 (or your company’s retirement age, where that is higher) before 1 October 2011.
• In accordance with the DRA procedures these employees will be able to request to work on beyond their notified retirement date and employers will be able to agree an extension to their employment.
• If you wish to dismiss under the DRA, then any extension granted must be for a fixed period of 6 months or less, as this is the maximum period allowed without the need to issue a further notification of retirement, which will be unlawful from 6 April 2011.
• Employers should discuss with all their workers their forward plans and work options. For older workers this opens up the opportunity to discuss working on, their retirement options and skills or job development. Performance discussions provide the opportunity for that discussion to naturally arise.
Which industry sectors in particular will benefit from the move?
Employing and retaining skilled older workers can benefit employers in all sectors. Many employers report benefiting from the commitment and good attendance shown by their older workers as they tend to have fewer accidents and lower levels of short-term sickness.
Older employees can also bring valuable experience and knowledge to a business. They can use their know-how to train and mentor less experienced colleagues, and may welcome the opportunity to work more flexibly to cover extended or unsocial business hours.