Frettens Update – Q & A – Managing staff without a default retirement age

  11th November 2011      
 Company News, Employment Law

The statutory default retirement age of 65 has now disappeared from our workplaces. Save for those few employers who have elected to objectively justify a retirement age, compulsory retirement at any age is now unlawful. This removal of the fixed end date of the employment relationship upon which employers have always been able to rely for workforce planning purposes, means that employers are now going to have to look at other ways of dealing with issues like succession planning or the underperformance or capability of older workers. This month’s Q&A section takes a look at the position that employers are now in and how some of the resulting issues might be dealt with.

Q: Are employers legally required to do anything in response to the removal of the Default Retirement Age (“DRA”)?

A: The short answer is that other than to ensure that it does not either (1) seek to compulsorily retire an employee unless it feels it can objectively justify a compulsory retirement age; or (2) discriminate against an employee in any way on grounds of his or her age, the employer is not legally bound to take any specific action in response to the removal of the DRA. This is because neither the Regulations nor the Equality Act 2010 (which prohibits age discrimination) contain any framework as to how employers should deal with workforce planning or approach employees about their future/retirement plans.

However, the employer who does nothing risks ending up with one or more of the following scenarios:

Older staff causing a bottleneck in terms of a career path for younger workers (which could itself end up with age discrimination claims from younger workers or, at least, with them feeling de-motivated);
Older employees deciding to leave where there has been no succession planning for their role (particularly if they occupy critical and/or senior roles); and
Issues with employees’ diminishing health and/or performance levels either going unchecked because in the past management of such employees would have been avoided in the knowledge they would soon be reaching compulsory retirement age, or risking an age discrimination claim if older workers are seen to be targeted for the management of such issues.
Q: So how should an employer deal with the potential workforce planning, performance and capability issues that the removal of the DRA presents?

A: The answer to dealing with all of these issues lies in the form of regular ‘workplace discussions’ with the employee covering the following areas:

Performance to date against targets, activities and outcomes;
Developmental or training needs;
Employer’s future plans;
Employee’s aims and aspirations; and
Future performance.
ACAS’s view is that such discussions will naturally result in older employees volunteering their retirement plans and/or desire to reduce their hours or change to lesser duties (as well as younger employees sharing their aspirations), which will then assist the employer in dealing with its workforce planning and, for performance and capability purposes, identify the standards which employees are expected to reach.

It is vital that these discussions take place right across the workforce, as focusing such discussions on older workers may lead to claims that they are being discriminated against on grounds of their age.

The exact form of the discussions is a matter for the employer, but they should be regular and held at least annually. It envisages that many employers will already have an existing platform into which such discussions could naturally be incorporated (e.g. appraisals).

Q: Can an employer directly ask an employee about any retirement plans they may have?

A: It is likely that even asking an employee what their retirement plans are or being seen to in any way encourage an older employee to leave or work less hours, would be seen as age discrimination on the part of the employer and should therefore be avoided.

This is supported by the ACAS Guidance which warns against asking any age related questions and advises that all employees should instead be asked generally about their plans and aims for the short, medium and long term. This will draw out open and frank responses from employees about their retirement and other personal plans. However, for most employers, obtaining such a full and frank response from its employees is going to require a significant change in workplace culture to one in which the employees feel confident that revealing their personal plans will not adversely affect their careers.

Once an employee has indicated they wish to retire, however, the employer is entitled to ask the employee about the date they intend to retire and any adjustments they would like to request to their working arrangements or hours in the lead up to their retirement.

Q: Is it okay to ask an employee about their retirement plans if the employer does so in the context of an ‘off the record’ or ‘without prejudice’ discussion?

A: Employers should not seek to get around what is in practical terms a prohibition on asking about an employee’s retirement plans by labelling the conversation ‘off the record’ or ‘without prejudice’.

This is because the label alone is not sufficient to protect the status of the conversation and, unless the employer and employee are in dispute relating to the employee’s employment, the discussion will almost certainly not be viewed by a court or employment tribunal as being off the record. This means that it will be able to be used by the employee as evidence of any alleged age discrimination or unfair dismissal in a subsequent claim.

Q: Can the employer set up a system of monitoring the performance and/or capability of older workers in order to ensure that they continue to be up to the job?

A: It is quite clear that any performance or capability monitoring which focuses on older workers (or indeed workers of any particular age) will be discriminatory on grounds of age and should not therefore be implemented.

However, what employers should be doing is reviewing and managing the performance and capability of employees consistently across the whole of the workforce, as employers can no longer simply leave diminishing performance or capability levels in an older worker based on an assumption that these will be resolved by the employee retiring in the near future.

Q: If an employee volunteers information that he or she wishes to retire at a certain point in time, can they be held to that in the event that they subsequently change their mind?

A: Even if an employee clearly states in a ‘workplace discussion’ that their intention is to retire on a particular date, they cannot be held to that statement by the employer unless and until the employee formally resigns. While the employer is entitled to ask the employee why they have changed their mind, any pressure placed on the employee to abide by their stated intention will almost certainly be viewed as discriminatory on grounds of age. However, once an employee formally resigns, the position is different. The employer does not then have to agree to any request by the employee to revoke or amend their resignation.

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