Live longer - work longer? Age discrimination law makes this likely - 6th January 2005

The Government has bowed to public pressure in its recently revealed proposals to crack down on age discrimination in the workplace, starting with its approach to employers' mandatory retirement ages. The original proposals were either that there would be no compulsory retirement age or that it should be fixed at 70. 

But following extensive consultation, the Government has concluded that legislation should:

1. set a default retirement age of 65, but also create a right for employees to request working beyond a compulsory retirement age, which employers will have a duty to consider; 
2. allow employers to objectively justify earlier retirement ages if they can show it is appropriate and necessary; 
3. ensure close monitoring of the retirement age provisions so that evidence is available for a formal review of age discrimination five years from implementation.

Currently, employers can set whatever retirement age they like, with many workers being retired at 60 or even younger. But the proposed reforms mean that people will no longer be required to retire before 65, unless their employer has proper justification. And the Government hopes that the employee’s right to request working beyond retirement age will help create a real culture change, which removes fixed retirement ages and recognises that many older employees have a lot to offer in the workplace. This decision has no impact on the age at which people can collect their state pension. 

The consequences for employers are a further raft of legislation and the need to avoid discrimination based on age, especially when recruiting and training employees. Extending working life may also impact companies with occupational pension schemes and other work-related benefits. 

Some employers are still concerned that for employees whose performance deteriorates with age, instead of being able to retire earlier, with dignity, they may only be able to leave after failing a company’s performance improvement or appraisal process. 

Bridget Juckes, Head of Business Services at Wards comments: “Many employers were hoping for a mechanism that enabled them to have an open discussion with an employee about their wish to scale down their role or activity, without risking it being seen as constructive dismissal and possibly ending up in a Tribunal. We hope the Government bows to pressure to provide this practical approach, otherwise employers may risk an increase in Tribunal claims. “

In 2005, the Department of Trade and Industry will be consulting on draft age legislation. The law is expected to come into effect in October 2006.