Planning for Retirement; the Abolition of the Default Retirement Age Raises Major Issues for Businesses in How They Deal with Their Older Workers, Says KATHRYN ROWE

Article excerpt

Byline: KATHRYN ROWE

ACCORDING to the latest figures published by the Department of Work and Pensions, one in four people aged under 16 will live until at least the age of 100.

Longevity is accelerating so rapidly that there is a clear need to work longer in order to save for a longer retirement.

AGE Kathryn Removing the default retirement age has been seen as a way of encouraging this.

As such, the default retirement age of 65 has been abolished with effect from April 6 this year, subject to some transitional provisions. Any dismissal because of age since that date will constitute direct age discrimination under the Equality Act 2010, and will therefore be unlawful, unless it can be objectively justified.

Previously, retirement was considered to be a fair reason for dismissal of employees aged 65 and over, and employers were able to rely on this as a tool for managing their workforce with relatively little risk of any repercussions.

While it is still possible for employers to retain a retirement age of their choosing, it is now only possible for employers to rely on this in retiring employees where the chosen retirement age is objectively justified. Employers now therefore have two options - to retain a fixed retirement age or to abandon fixed retirement ages all together. If they retain the fixed retirement age then they will need to be able to objectively justify this.

Objective justification is only likely to apply in limited circumstances. Employers will need to be able to show that there is a real business need for any retirement age, and that there is a legitimate aim which needs to be met. They will have to show that the particular retirement age meets that aim and that it is a proportionate step to take in order to meet the aim.

Employers would be well-advised to take steps to ensure that they can provide an evidential basis for this justification. For example, they could carry out a workforce assessment and record their findings where a retirement age is needed for reasons such as the stamina or physical fitness required for a particular role. …

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