Employers Urged To Review Retirement Policies

An employment law expert at Irwin Mitchell has urged businesses to review their retirement procedures as changes to regulations in the area come into force today (April 6th).

The Default Retirement Age (or DRA) has been abolished, subject to some transition measures over the short term, which means employers will no longer be able to automatically retire workers when they reach 65.

Instead, employers would have to show a specific need for having a policy for retirement at a given age that can be objectively justified if they want to have their own DRA.

The test is whether they have a “legitimate aim” and, if so, whether the chosen DRA is a “proportionate means” of achieving that aim.  On that analysis, a business might be able to justify a DRA across the board, not have one at all, have one for only part of the workforce or even have more than one for different groups of employees. 

Without a DRA, they run the risk of unfair dismissal and age discrimination claims if they dismiss older employees without a good reason.  The obvious potential reason would be “performance” but that would need careful handling and a review of policies, procedure and practice. 

Recent figures compiled by Irwin Mitchell revealed that more than half of the businesses polled believe that the decision to abolish the DRA will lead to a rise in such disputes, with some raising concerns over the speed of the new legislation’s introduction and the government’s efforts to raise awareness of the changes.

Discussing the move, Tom Flanagan, the new head of Employment at Irwin Mitchell, said: “While our research shows businesses may have some worries about the launch of the legislation, they now have to consider how they can manage its impact.

“Businesses need to review first, whether they want a DRA and, if so, whether they can justify it in light of their aims.  If they don’t want or can’t put one in place, they will need to review their procedures in relation to retirement, taking a clear approach to assessing their performance management processes.

“The right policies and good practice could make a dramatic difference and ensure workforces remain content and that firms do not face time-consuming and costly tribunal claims.

“This affects every employer in the country.  A growing number of people are working  longer, so this is something that companies simply cannot ignore.”