Statutory Retirement Age – January 2011

May 9, 2011

I’m Gonna Work Unitl I Drop!

The Government has finally confirmed the proposal to abolish the statutory retirement age of 65 for employees with effect from 1st April 2011. This means that, unless you have a justifiable reason to impose a contractual retirement age in your business, retirement will no longer be a fair reason for dismissal. This decision heralds a period of enormous change in our approach to managing older employees, who are likely to want to continue working for longer, at least until the age of 67 when the raised pension age kicks in.

What should I do?

As an employer your current retirement procedures will no longer be lawful after 1st April this year. If you have any employees who are over 65 or will reach the age of 65 prior to 1st October you can still operate these procedures up until 1st April (giving employees their statutory 6 months notice of retirement) but after this date you will need to view ‘retirement’ in a very different way. Consider the following top tips:

Top Tips

  • Review and maintain a current list of the ages of older employees. If any are eligible for retirement under the existing laws prior to 1st October consider whether you want to take action – and if you do, start the process right now.
  • You will need to scrap your existing retirement policy from April 2011. If you feel that as a business you may legitimately retain a contractual retirement age because there are certain constraints of age that characterise the jobs that your employees do (eg physically demanding work, health and safety constraints, size and nature of your business) then seek advice on whether you might qualify. You will need to demonstrate that this is a ‘proportionate means of achieving a legitimate aim’ as the legal jargon goes.
  • Consider how you will approach performance management in the future. As an employer you will need to be more proactive in determining the requirements of the roles that your employees are required to carry out and also have a greater awareness of the skills and experience available to you, especially in respect of older employees.
  • Start and maintain a dialogue with older employees, ascertain what alternatives are attractive to them as they carry on working for longer. Older workers may see this as a transitional period in their lives so you may want to consider flexible working, or using the skills and experience of older employees to train the younger workforce.
  • Review your performance and capability procedures to ensure their robustness for managing potential performance procedures for older employees.
  • Take advice before taking action. We expect a rise in unfair dismissal claims as a result of this change in legislation, so you will need to be aware of all the pitfalls and make sure you have a fair process in place.

To take advantage of a free audit of your policies and procedures or for more information you can contact us. We would be pleased to hear from you.