Employers unsure about the implications of the scrapping of the default retirement age

Since the UK Government announced its intentions to review the default retirement age, Croner has seen a 56% increase in calls to its helpline from confused employers.
 
According to Croner, many employers are unsure whether they will be able to force employees to retire under the new plans.
 
Current UK legislation allows employers to force an employee to retire at 65 without paying financial compensation, with the only obligation being to hold a meeting with the staff member to discuss plans at least six months before their 65th birthday. Under the new proposals, from October 2011 employers will no longer be able to dismiss staff when they reach 65 and will not be able to issue forced retirement notices after April 2011 – six months before the October change.
 
Liz Iles, senior employment consultant at Croner, said: "While the new plans have been introduced to allow people to work longer and are intended to bring benefits to employers and staff, there is increasing uncertainty among employers about where they stand and what this means in terms of compulsory retirement in the future.
 
"While it’s important that organisations prepare for the changes when they come into force next year, for the time being employers should continue to approach retirement in the same way as now.
 
"Employers need to make sure their retirement policy is based on the needs of their business and should ensure any potential loss of skills and abilities to the organisation are fully evaluated. They need to avoid making assumptions about the capabilities of older workers and should not see age as the sole criterion when operating such a scheme. This will be even more relevant when the changes come into effect next year."
 
But Iles does issue a warning to employers when the new legislation comes into force. She added: "The onus will be on employers to prove whether or not their staff will be capable of continuing to work in their current role when they pass the age of 65. However, capability dismissals can be hard to undertake and prove to be fair when there is a gradual decline in a person’s performance, and often employers look to avoid such processes with older workers.
 
"Although employers can currently force their staff to retire, in the future any grounds for dismissal will need to be the same for all employees regardless of their age. As the new plans go through the consultation process it’s not certain how the new scheme will operate. However, it does suggest employers will need to be careful not to dismiss employees on the basis of age as this could lead to employment tribunal situations for some individuals who believe they have been discriminated against."