Proposals to raise the retirement age have been met with concern; the recommendation has been put in place as a possible solution to plug the UK’s pension shortfall which Adair Turner has revealed to be £57 billion a year.
According to Croner, employers could become embroiled in costly red tape when faced with hiring and firing older workers.
Their recent survey shows that 85% of HR professionals believe that retirement age should not be increased above the age of 65.
Claims for unfair dismissal, disability discrimination and age discrimination could soar if employers dismiss or reject candidates for reasons relating to age.
Croner’s Richard Smith commented:
“It’s an unfortunate reality that as we get older, some people, especially in manual professions, may no longer be capable of doing their job to the same standard. But an employee’s right to claim unfair dismissal stops once they reach 65 meaning employers can allow older people to continue working knowing that they can legally bring such arrangements to an end if they wish.
“However, if the retirement age was increased it is likely that so too would the age at which an employee can raise a claim of unfair dismissal, meaning employers would no longer have a ‘get out’ clause to dismiss workers when they reach 65. This could lead to employers treating older workers more harshly during recruitment, believing that refusing employment in the first place is less risky than having to ultimately dismiss an unsatisfactory older worker.”
Smith warns that employers face a further risk when dismissing an employee for reasons of capability under the Disability Discrimination Act.
He says: “Employers need to understand the difference between capability and disability if dismissing an older employee, as they could face a claim of disability discrimination, for which there is no maximum fine.”
Further protection for older workers will be in place in 2006, when new age discrimination legislation is introduced, which may even outlaw the use of retirement ages all together.