Rise in retirement age would mean more red tape for employers

Raising the retirement age could wrap employers up in costly red tape when it comes to hiring and firing older workers, according to Croner, one of the UK’s leading providers of business information and advice.

The company is highlighting the potential legal pitfalls employers could face in response to the recent recommendation by the Pensions Commission with regard to raising the retirement age as a solution to the UK’s pension shortfall.

Employers could be risking claims of unfair dismissal, disability discrimination and age discrimination if they dismiss an employee, or refuse to employ someone, for reasons relating to their age.

Richard Smith, HR expert at Croner, part of Wolters Kluwer UK, believes that the problem of the pension deficit shouldn’t be dumped on employers, and says that if the retirement age was raised it could end up costing businesses who feel they have no option but to hold on to older workers for fear of employment tribunal claims.

And a recent Croner survey reveals that eighty-five percent of HR professionals think that the statutory retirement age should remain at 65.

Richard says: Raising the retirement age by compulsion does not make economic sense for most businesses and should not be used as a solution to our pension problems.

Employers have enough red tape to deal with already, and raising the retirement age opens up a minefield of litigation over the treatment of ageing workers.

It’s an unfortunate reality that as we get older, some people, especially in manual professions, may no longer be capable of doing their job to the same standard. But an employee’s right to claim unfair dismissal stops once they reach 65 meaning employers can allow older people to continue working knowing that they can legally bring such arrangements to an end if they wish.

However, if the retirement age was increased it is likely that so too would the age at which an employee can raise a claim of unfair dismissal, meaning employers would no longer have a ’get out’ clause to dismiss workers when they reach 65.

This could lead to employers treating older workers more harshly during recruitment, believing that refusing employment in the first place is less risky than having to ultimately dismiss an unsatisfactory older worker.

But Richard warns that employers face a further risk when dismissing an employee for reasons of capability under the Disability Discrimination Act.

He says: Employers need to understand the difference between capability and disability if dismissing an older employee, as they could face a claim of disability discrimination, for which there is no maximum fine.

And even further protection for older workers will be in place in 2006, when new age discrimination legislation is introduced, which may even outlaw the use of retirement ages all together.

Richard says: It’s not a case of employers being ageist and many do their best to treat all workers fairly. In many cases employers are happy for employees to continue working beyond the retirement age if they are competent and wish to do so.

But with so many regulations in place to protect employees from unfair dismissal and discrimination it is vital that employers keep up to date with legislation. This is even more paramount if the retirement age is raised, as more older people in the workplace increase the risk of falling foul of the law.

Croner offers the following guidelines to employers to help ensure they do not dismiss older employees unfairly:

Don’t assume that employees expect to retire at 65. Many wish to continue to work beyond this age Look at the possible benefits older workers can bring in terms of skills, experience, attendance levels and maturity More mature employees may be less prone to ’job hop’ and thereby reduce costs of retention and replacement Even if a number of redundancies are being made, age may not be a fair criteria to adopt for selection - although consideration for selection should be given to those who are past retirement age If it is felt that the employee is no longer capable of their work due to deteriorating health, ask them for a medical report and consider any reasonable adjustments that could be made to their current job to allow them to continue employment. If no adjustments can be made, alternative work or part-time work should be also considered Update all contracts of employment with the Company policy on retirement, which should include the age at which they will be expected to retire.