29-07-2010
How you may have to manage your ageing workforce in the future
As you may have heard in the media, the Government has today released a Consultation paper on its proposals to phase out the Default Retirement Age (“DRA”), which is currently fixed at 65. Demographic changes, tackling age discrimination and a reduction in the administrative burden on employers are some of the reasons given for abolition of the DRA.
The Current Law
In October 2006, the Employment Equality (Age) Regulations 2006 were introduced to prohibit age discrimination in employment. However, they also introduced the DRA and prohibited retirement below the age of 65, unless it could be objectively justified. This has allowed you, as an employer, to discriminate against employees on grounds of age, though only when it came to retirement and if certain procedures have first been followed.
Proposed Changes
Today’s consultation paper proposes to phase out the DRA and associated statutory retirement procedures from 6 April 2011. From that date, employers will, if it becomes law, not be able to issue new notifications of retirement. Thus, to retire and dismiss an employee one of the fair reasons for dismissal under the Employment Rights Act 1996 would have to be demonstrated. You would still, as an employer, be able to have a compulsory retirement age in place as long as it can be objectively justified as a proportionate means of achieving a legitimate aim. DRA-based retirements would completely cease with effect from 1 October 2011.
Although the changes would apply to employees in general, not all employee groups would be affected, with some being exempt – e.g. the police, partnerships, or certain professions that already have a statutory age limit.
Transitional Provisions
There will be a 6-month transitional period from 6 April 2011 until 1 October 2011, during which certain transitional provisions will apply if these proposals become law.
The transitional period would enable any retirements to be completed where the employee has been notified before 6 April 2011 and where the retirement would be completed by 1 October 2011.
If an employee has been notified before 6 April 201 that s/he will be retiremed, but the actual retirement falls after 1 October 2011, you would not be able to compulsorily retire them so would need to provide objective justification.
Next Steps
Clearly, as the proposals are still in the consultation process, they may be subject to change. The consultation committee will accept and consider comments on the proposals until 21 October 2010, with responses being issued in November 2010. BPE is planning to submit a co-ordinated response on behalf of its clients; if you would like your comments conveyed, please forward them to me.
Although these are currently only proposals, it is worthwhile considering how they may affect you by reviewing contracts, handbooks and assessing how this will impact on their workforce.
The Current Law
In October 2006, the Employment Equality (Age) Regulations 2006 were introduced to prohibit age discrimination in employment. However, they also introduced the DRA and prohibited retirement below the age of 65, unless it could be objectively justified. This has allowed you, as an employer, to discriminate against employees on grounds of age, though only when it came to retirement and if certain procedures have first been followed.
Proposed Changes
Today’s consultation paper proposes to phase out the DRA and associated statutory retirement procedures from 6 April 2011. From that date, employers will, if it becomes law, not be able to issue new notifications of retirement. Thus, to retire and dismiss an employee one of the fair reasons for dismissal under the Employment Rights Act 1996 would have to be demonstrated. You would still, as an employer, be able to have a compulsory retirement age in place as long as it can be objectively justified as a proportionate means of achieving a legitimate aim. DRA-based retirements would completely cease with effect from 1 October 2011.
Although the changes would apply to employees in general, not all employee groups would be affected, with some being exempt – e.g. the police, partnerships, or certain professions that already have a statutory age limit.
Transitional Provisions
There will be a 6-month transitional period from 6 April 2011 until 1 October 2011, during which certain transitional provisions will apply if these proposals become law.
The transitional period would enable any retirements to be completed where the employee has been notified before 6 April 2011 and where the retirement would be completed by 1 October 2011.
If an employee has been notified before 6 April 201 that s/he will be retiremed, but the actual retirement falls after 1 October 2011, you would not be able to compulsorily retire them so would need to provide objective justification.
Next Steps
Clearly, as the proposals are still in the consultation process, they may be subject to change. The consultation committee will accept and consider comments on the proposals until 21 October 2010, with responses being issued in November 2010. BPE is planning to submit a co-ordinated response on behalf of its clients; if you would like your comments conveyed, please forward them to me.
Although these are currently only proposals, it is worthwhile considering how they may affect you by reviewing contracts, handbooks and assessing how this will impact on their workforce.
