Nearly 100 HR professionals and business managers recently attended a seminar at the Copthorne Hotel, Merry Hill on 6 October 2010 hosted by George Green LLP solicitors and CIPD.
The audience heard from speakers including Tim Lang and Julia Fitzsimmons from George Green LLP and Daniel Barnett a renowned Employment Law Barrister regarding the proposed removal of the default retirement age of 65 on 1 October 2011.
Mr Barnett said that the Government was clear that the default retirement age would be removed regardless of the outcome of the ongoing consultation. Businesses had to make a decision as to whether they should either keep their own retirement age or remove their retirement age.
The keeping of a retirement age was a higher risk approach as it will be necessary for employers to justify a retirement age in an Employment Tribunal. This would involve establishing a legitimate aim such as improving recruitment and retention, bringing in new blood, facilitating long term employment planning and limiting the need to dismiss employees for deteriorating performance. However having a retirement age would have to be a proportionate means of achieving that aim and it is extremely crude. There are much more focussed ways of dealing with older workers and it has a massive impact on employees particularly those with a lack of any effective occupational or state pension. The Government has clearly decided that it can no longer justify the default retirement of 65 and it was difficult to see how employers could hope to do so.
The removal of the retirement age was a much safer option. Most employees want to retire or reduce their workload in any event. At present only 8% of the workforce ask to work beyond retirement. There is nothing to stop an employer dismissing on the grounds of poor performance as long as they follow a clear performance management procedure.
Employers are urged to start thinking now whether they wish to retain their retirement age and if so it was necessary to start consulting a recognised union or the workforce now and ensure a full paper trail justifying the decision. If the union or the employees agree to retain a retirement age then this will be extremely useful in supporting a justification argument.
On 12 October European Court of Justice handed down a decision on this subject. This held that a compulsory retirement age of 65 in a contract of employment was justified if the retirement age had been collectively negotiated by a union, the employee receives a pension so that they have replacement income and compulsory retirement has been in widespread use in the relevant country for a long time without having had any effect on the levels of employment. However employers should be aware that UK Tribunals have been reluctant to follow the liberal approach of the European Court of Justice when it comes to justifying age discrimination.
The advice remains that the safer option for employers is to remove the retirement age. Many large employers (eg. Lloyds Banking Group) are in the process of doing so already.