The big news of the week in employment law terms is the government’s confirmation of the timetable for the abolition of the default retirement age (DRA) of 65 and the statutory retirement procedure.
We have been waiting with baited breath since summer last year, when the Government first issued their proposals on the issue, to see just how the abolition would pan out. It wasn’t a question of whether it would happen, but when.
Now we know for sure. No more notices of retirement can be given after 6th April 2011 and no more retirement dismissals can be made after 1st October 2011. It is still, for the time being, possible to begin a new retirement procedure as long as the dismissal will take effect before 1st October 2011.
We’re pleased that the Government is implementing a ‘one in, one out’ policy in relation to pieces of legislation in order not to add to the mountain of employment laws that employers must contend with. Clearly the DRA and the statutory procedure are amongst the first victims.
This is going to have a large impact on employers. For almost five years, employers have been able to safely terminate the employment of older employees once they reach a certain age without being forced to confront the sometimes delicate issue of decreased performance of someone in their sixties, for example. As long as the statutory procedure was followed to the letter, a fairly simple (but long) and risk free dismissal occurred. It is a fact that very many employers took advantage of this provision.
Now employers will be forced to manage the performance of older employees and, if their ability to do their job wanes, will have to use the capability route in order to fairly dismiss them in the same way as they would deal with someone in their twenties experiencing difficulties in their ability to do their job.
Arguably, the main motivation for removing the DRA and the statutory retirement procedure is money. If employees are working for longer, they will have more disposable income to spend at the shops while they remain in work and a larger savings pot to dip into for when they do eventually give up work. The more money ploughed into the economy this way is just what the Government needs to boost the current coffers.
A nice by-product of this is the control it gives people reaching the age of 65 to decide for themselves just when they will hang up the overalls.