Is it time to reintroduce a default retirement age?

11 Oct 2017 By Karnis Mullings

Lawyer Karnis Mullings assesses the impact of abolishing the policy, and asks whether, post-Brexit, it should be brought back

We’ve just been through the political party conference season, with the spotlight turning to the party leaders as they strut across auditoriums in Brighton, Manchester and Bournemouth. The latter hosted the first major event for the new Liberal Democrat leader, Sir Vince Cable. Cable’s appointment at the age of 74 means that along with May (60) and Corbyn (68) we now have the oldest set of party leaders since 1955.

The senior age of party leaders has become a trend of late, and in the last 10 years we have seen positive signs of progress in the fight against ageism in the workplace – including the legislation introduced in 2011 to abolish the default retirement age.

Any dismissals on the grounds of an employee reaching retirement age, taking place on or after 1 October 2011, have to be justified under the Equality Act 2010. Employers need to demonstrate that there is a legitimate reason for the dismissal, regardless of whether they decide to keep a fixed retirement age or to retire people on a case-by-case basis.

Six years on, is it now time to review the impact of the legislation?

Retention of employees

A common reason for employees leaving any business is that they cannot see a clear path to success and advancement. For some organisations, an ageing workforce is exacerbating the situation as those further down the pecking order see little hope of development and therefore choose to leave. Organisations that retain older employees, particularly in senior positions, could therefore be smothering the progression opportunities for younger team members. The reintroduction of a default retirement age could help to improve employee retention. 

Succession planning

Some roles require a lengthy training process with employees needing to be in post for several years before being considered fully qualified and competent. The default retirement age gave employers a high level of certainty regarding retirement plans and enabled effective succession planning. Now, employers are left in limbo, unwilling even to instigate conversations about retirement for fear of allegations of age discrimination. Returning to the pre-2011 position would give many employers certainty and enable them to plan for and protect the future of their businesses.

Addressing underperformance

In an ideal world, underperforming employees would be managed proactively. But this doesn’t always happen. The default retirement age provided a fallback in cases of underperformance that, for one reason or another, had not been tackled. 

The default retirement age did not mean that all employees at retirement age were dismissed; employers had the option to retain those who were still adding value. It follows that in the majority of cases, only those whose competency was in doubt, or whose role was no longer required, were at risk of dismissal.

Eliminating the default retirement age has placed more emphasis on performance management. However, managing underperformance costs time and money and, even if handled well, some employees will respond negatively to being informed that they are underperforming. With the protection of a default retirement age removed, organisations risk litigation from aggrieved employees in these cases. In some instances, the threat of an employment tribunal claim can be a safety blanket for incompetency. 

Competence not age

The UK’s ageing population has inevitably led to an ageing workforce. However, an issue arises where organisations do not manage their workforce properly and become overwhelmed by an ageing workforce. The skills and experience that older employees bring needs to be recognised, but we must not allow an ageing workforce to shape the strategy and direction of an organisation.

Ultimately, employees should always be judged on competency and not age, but poor processes and management can lead to a stale workforce that grows old, hampers productivity and haemorrhages talent.

The decision to leave the EU presents an opportunity to shape employment law. Reintroducing a default retirement age should be something up for debate; we need to conduct an honest review of whether it is best for UK plc and its workforce. 

Karnis Mullings is an employment lawyer at Vista

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