The 6th of April 2011 marks a milestone in the employment rights of older workers. Employers will no longer be able to issue forced retirement notices to their 65+ workers, meaning that for the first time employees in this age group will have the same legal protection as their younger colleagues.
Such a step has been needed for years, and can surely only be a positive move for the 900,000 people – and rising – who already work beyond age 65. Chart 1 shows the upwards trend in people working at age 65 and above, and how this has increased by over 50 per cent going back to May 2005. While not everyone wants to continue to work after 65, for those who do the end of forced retirement will restore personal choice and economic independence, allowing people continue to build pension provision and benefit from the social networks that many workplaces bring.
Chart 1: numbers in employment aged 65+
So we congratulate the Government for sticking to their guns and ending this deeply unfair practice.
There have, however, been a couple of minor changes to the transitional arrangements. The Department for Business, Innovation and Skills had originally proposed having a blanket end to forced retirement on 30 September 2011 i.e. within six months of the last notice-issuing day (yesterday). However, last minute changes to the transitional arrangements have meant that employers will still be able to give up to a years notice to their employees – providing they are 65 before October 2011– meaning workers could be forced out until April 2012. In addition, it will still be possible to agree an extension of up to a furher six months, meaning the final forced retirements could take place as far away as October 2012. This is disappointing for many, but for some it will be considered preferable to being forced out of work immediately.
So what’s likely to happen in the post-DRA world?
Of course the main impact is on the circa 100,000 people each year who are forcibly retired. All of these people will be able to continue working, should they choose to do so.
This is just one part of the Government’s policy objective of extending working lives, and along with other measures – most notably the raising of the State Pension Age – average retirement ages are likely to continue rising. At present, the average age at which men retire is 64.5 – below the State Pension Age – and for women it is 62. Both these have been continually rising for many years. It is therefore likely that this trend will continue, and probably be speeded up, leading to more older workers active in the labour market.
Employer representative groups have raised concerns over a potential surge in the increase in the number of age discrimination-related employment tribunal claims. However, we believe that this is far from a certainty.
It is in the interests of no-one that there are spurious discrimination claims being made. We therefore believe the Government should set out in greater detail what treatment is and isn’t discriminatory, giving both employers and employees a better knowledge of how to act around this potentially sensitive issue.
On a positive note, a side-effect of no longer having a mandatory retirement age could be improved management practices, with better dialogue between older workers and their employer. ACAS has produced guidelines on how to handle these future working/retirement planning discussions, but we believe that such discussions must be centred around the needs of the individual, not the employer, and the former must be under no obligation to reveal their future plans. Also, the discussions should not be tied to any particular age – managers should ideally be discussing future aspirations with employees of all ages. If a particular birthday triggers this process it will merely serve to maintain stigmas and negative stereotypes of older workers.
If conducted in an atmosphere of trust such discussions could be good for everyone.
We expect only a minority of employers to try and continue to use mandatory retirement. The vast majority – even those who do currently use the DRA on a widespread basis – we believe are likely to adjust their organisational policies and practices, and then simply get on with running their business, hopefully fully utilising their older workers rather than leaving them on the scrapheap.
In short, the Government needs to set the conditions to enable people to work longer, and support them – and employers – to make this a reality, for example through improving training opportunities. Removing the Default Retirement Age is a great first step, but to boost employment rates an even greater effort is needed.