Retirement – practical aspects
June 9, 2011 8:39 am
Until recently most working lives went gradually up the escalator of age and at the top the employee stepped off completely, all of a sudden, on reaching their 60 or 65th birthday. And the workforce could keep moving along up behind. All that has now changed. The employer’s right to retire an employee at a particular age has been withdrawn and provided they can do the job the employee can carry on at work for ever, or at least until death!
Forced retirement is only allowed if the employer can show a particular reason why a certain age is just too old for the job, which is likely to be very rare. So most employers have no choice but to face the challenges of an ageing, indefinite workforce and plan accordingly.
Employers have had the option to make older employees retire and so manage the size of the workforce and make way for successors. Now, to pressure an older employee to leave, to treat them differently in any way just because of age, may lead to a claim of age discrimination. If they are dismissed because of age they may also have a claim for unfair dismissal. The compensation can be mainly their loss of earnings, and in view of their poor chances of getting a replacement job in older age, and because of their right to have continued working, the timeline of damages may be very long indeed. There is also compensation for injury to their feelings, an award of up to £30,000.
Unless an employee agrees to go – and many will if only they can afford to – the only way employment can end is for the employer to dismiss. A rather cruel end to a life of work, and what may be a long relationship, but if the employee is no longer good for the business action has to be taken, lowering the risks as much as possible. So, if not allowed to make them retire, what can an employer do?
If the reason for wanting an employee gone is that performance is no longer good enough, then the reason is not their age but their lack of capability. A dismissal can be legally fair for lack of capability, provided this is the genuine reason, a fair process is followed and the judgement is reasonable in all the circumstances. Age is not a defence: it cuts both ways and being ‘age blind’ means you can expect the same standards of an older employee.
So performance management is key: making sure that employees are up to the job. But this capability management must not be imposed only on older workers or that will be age discrimination in itself. So a regime to identify any capability issues should be in place for all workers. No improvement after fair trial may be justify dismissal, even if they are old. Particular care should be taken if there are disability or carer issues.
Managing performance problems with older workers can be difficult due to considerations of dignity, loyalty and kindness. No one likes being told they are not up to the job – and few like being the messenger.
So, how to plan? Discussions need to be had regularly with all employees about their future plans, perhaps built into regular appraisals. Review or adopt all relevant policies, including equality and capability. Review contracts to ensure compliance. Most of all, have a good performance management regime for all, which gives a structure for non-discriminatory monitoring and action if there are performance problems. Properly done this should raise standards across the workforce, as well as assist the organisation to deal with the demise of forced retirements.
Frances Barker is Employment Partner at Blocks Solicitors. Contact her on 01473 343911 firstname.lastname@example.org
The above is general advice only and specific advice should be taken before action is taken.