Employment ebulletin June 2011 - Life without the DRA

Employers are no longer permitted to retire their employees in line with the default retirement age (DRA). What options do employers now have?

Retain a company retirement age

If an employer is going to retain a retirement age, it must be because:

• A real business need is being met (e.g. ensuring a high quality of service or a continued competence and Workforce planning)
• Having the particular retirement age meets that aim
• It is proportionate to use that retirement age as a means of meeting that aim

Employers will need to show that they have a justified reason for having a particular retirement age.  However, employers should be wary of using costs as a reason for retaining a retirement age as costs alone cannot form the basis of a decision to retain a retirement age and another factor must also be present to avoid or reduce the risk of discrimination claims.

Retirement management

The removal of the DRA just means that employers cannot force employees to retire at a set age unless the age can be objectively justified.  Open discussions with employees about their future plans are not prohibited and so such discussions may help identify where the employee may see themselves in the next year or five years, helping the business to plan ahead.

When?
All managers should be meeting with their employees at least once a year to complete their appraisals and so such discussions may well take place then.  Other managers may meet with their employees more frequently and it may be that such discussions take place at one of these meetings.  There is no hard and fast rule about the frequency of such meetings but guidance suggests at least once per year.  Be cautious about holding them too frequently however, as this could give rise to complaint.

What?
The meetings provide an opportunity for employers to discuss the employee’s future plans, future work requirements and how these impact on the employee.  Employers may wish to discuss:

• Performance to date against targets, activities and outcomes and future performance
• Developmental or training needs
• Future plans and the aims and aspirations of the employee (short, medium and long term)

Options
The abolition of the DRA does not have to be a stumbling block for employers.  It can be seen as a way of retaining valued and skilled members of a workforce and a way of supporting employees in their retirement.  The following are just examples of alternatives to retirement which may well serve both employer and employee well:

• Reduction in the employee’s working hours
• It may be possible to change the employee’s duties or event their role
• Does the employee wish to consider a sabbatical?
• Do they wish to have a retirement plan in place whereby they reduces their working week by one day per year over the next few years before retiring?