Government scrapping default retirement age

Scrapping the default retirement age only means that employees will not automatically be expected to retire at a fixed age. There is no reason for experienced capable staff to retire just because they are 65. But will employers look to put clauses into contracts of employment stipulating a fixed age of retirement based on the nature of their business? If employers want a fixed age they can still insert this into their contracts of employment. (The employer will still need to be able to objectively justify a fixed contractual age for retirement, and this may largely depend on the nature of the business). Otherwise, if there are concerns about any employee’s capability, regardless of age, then capability procedures can be followed in the normal way. Vacancies arise when staff leave employment, or the company expands. In a buoyant market staff move on to increase experience, more varied roles or for greater salaries. Is retirement a major reason for staff vacancies? It is thought not. There is an argument to support the proposition that older workers are more reliable and more loyal, and less likely to leave their existing employer to enhance career progression. But will employers embrace or exploit this law?

Employers should continue to ensure they follow fair procedures both at the recruitment stage and at termination. They may otherwise face proceedings for age discrimination. What do you think?

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How will a change in retirement age affect businesses?

It is worth considering the impact of the removal of the default retirement age on companies and individuals. If someone at or approaching 65 is underperforming then companies will be more inclined to follow capability procedures, and terminate for lack of capacity, whereas before they might have been prepared to wait until they could lawfully issue notice of retirement.

Companies may also ensure a retirement age is included in their contracts of employment. Alternatively, where the above does not apply, individuals who may have been looking forward to retiring at 65, may now feel morally compelled to work longer.

Removal of the default retirement age could result in increased litigation. Older people may challenge contractual retirement ages, believe they have been unfairly targeted for capability proceedings, or feel that termination for any other reason, including redundancy, is in fact age discrimination and an alternative means of terminating employment when they can no longer be forced to retire at 65. (We know that age discrimination exists, hence the difficulty for older workers seeking re-employment- removing the default retirement age will not remove the underlying problem).

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