Almost half of employers want default retirement age reinstated
Tom Newcombe, April 03, 2013
Nearly half of employers would like the default retirement age (DRA) reinstated, according to a survey published by global law firm Eversheds.
Two years ago the Government changed the law to start phasing out the DRA. This means that now an employer has to justify any decision to retire someone against their wishes to avoid falling foul of age discrimination and unfair dismissal laws.
The study of 307 employers found that fewer than 3% of respondents have a policy of mandatory retirement for employees, this is compared with 69% of those who took part in the study by Eversheds two years ago.
The survey revealed that a third of employers felt the abolition of the DRA has had a negative or very negative impact on their organisation.
It also found that an overwhelming majority of 97% thinks their organisation no longer operates a mandatory retirement age.
Professor Owen Warnock, partner at Eversheds said: "It is clear that, for most of those who took part in the study, it was the Government's decision to phase out the DRA that provided the impetus for change: 72% of those who respondents said they would still be operating a mandatory retirement age if the law had not been changed.
"This is consistent with the results of a survey we carried out two years ago, just before the DRA started being phased out. Back then a significant majority (69%) of respondents still had a policy of mandatory retirement for some or all of their workforce subject to an employee's right to ask to stay longer."
Many of the respondents reported that the change in the law has had negative effects for their organisation: two-thirds cited difficulties in succession planning whilst just under half reported that opportunities were being blocked for younger workers.
Other implications included increased costs of redundancies and/or providing benefits (37%), more management time having to be spent on performance management (29%), whilst just over a fifth reported an increase in ill-health absence.
Warnock concluded: "The chances of the DRA being reinstated under the present Government are slim, especially as its abolition was one of the very first employment law changes agreed by the coalition partners.
"Nor would a change in Government at the next election be likely to result in a revised approach given that reintroducing the DRA could be seen as undermining older workers' ability to remain in the workforce at a time when it appears to have been widely accepted that people will generally have to continue working until later in life, due to changing demographics, longer life expectancy and the cost of funding pensions."