A new survey by the London Chamber of Commerce and Industry (LCCI) and Penningtons Solicitors LLP reveals that London employers are ill-prepared to deal with the implications that the abolition of the default retirement age (DRA) may have on managing their workforce. Entitled 'Tackling the age-old problem of retirement', the findings show that 57 per cent are not prepared for and 26 per cent do not know about the biggest change to 2011 employment law.
The transitional arrangements for the abolition of the DRA of 65 on 1 October 2011 came into effect on 6 April 2011. The changes mean that an employee will not have to retire unless they want to do so or the business can justify a normal retirement age.
Penningtons/LCCI survey key findings
- More than half (57 per cent) of respondents have not yet taken any action to deal effectively with the April and October 2011 changes to the retirement age, although more than four out of ten (43 per cent) respondents consider themselves to be either quite well or very well prepared.
- More than a quarter (26 per cent) of respondents are not well informed about the abolition of the DRA.
- More than three quarters (78 per cent) of respondents think that workers should be retained on their ability rather than their age.
- More than two thirds (68 per cent) of respondents agree that the UK's employment legal framework needs to be modernised. Although over a third (38 per cent) agree or strongly agree that keeping people at work longer will NOT solve the pensions’ crisis.
- More than half (56 per cent) are concerned that older employees may refuse to retire even when they cannot perform their job effectively, and 54 per cent are concerned about the lack of clarity about how to legitimately retire employees.
- More than four out of ten (44 per cent) of respondents are concerned that there will be more age-related and Disability Discrimination Act (DDA) tribunal claims for unfair dismissal and that there will be fewer promotion opportunities for younger workers.
Commenting on the findings of the survey, Jon Heuvel, head of employment law at Penningtons Solicitors, said: "London employers see the change as providing an opportunity to benefit from the marriage of older experienced staff with the next generation of workers. However, while they embrace the notion of a more flexible environment, there is clearly a degree of anxiety and a lack of understanding about how employers can deal effectively and fairly with older employees whose capability to perform their job is clearly diminishing."
The report includes a six point plan for employers to help them minimise the risks of being on the wrong end of employment-related legal claims. The plan involves applying the following five best practice points together with advice on how to achieve a fair dismissal on capability grounds:
1. promoting more positive procedural terminology
2. educating managers to respond to older workers' needs
3. turning the annual appraisal system into a 365 day rolling programme
4. encouraging mentoring roles for older workers
5. building a workplace culture of transparency and clear communication.
"By basing their general approach to managing their staff on these five core principles, employers may be able to avoid having to dismiss staff on capability grounds, the only mechanism now available for managing older workers out of the business apart from genuine redundancy. In truth, most people are very aware of their own levels of performance and, if managed properly, are more likely to retire voluntarily long before the employer reaches the point of needing to invoke a formal process", said Heuvel.
Colin Stanbridge, Chief Executive of the LCCI, said: "I urge employers to get to grips with how these changes will affect them and how they can incorporate them into their workforce planning strategies. We believe that our report's six point plan is a good starting point to ensure a smooth transition to the new framework."
To view 'Tackling the age-old problem of retirement, The Penningtons/LCCI survey of London employers on the changes to the default retirement age (DRA)', please click here.
Contact: Jon Heuvel
Related services: Employment