‘Retirement can be a controversial topic’
Retirement has become an increasingly complex issue and the question of whether an employer should be able to impose a mandatory retirement age is a controversial topic.
In December 2015, a report on the ‘Employment Equality (Abolition of Mandatory Retirement Ages) Bill 2014’ concluded that a mandatory retirement age was an outdated concept. The default retirement age (65) is being phased out and people want to work as long as they like.
A surprisingly large number of employers do not have a clearly defined policy on retirement but rely on the States Pension age to determine the retirement age. The potential impact on public finances has led to recent changes in the State Pension age – the current retirement age is 66 rising to 67 by 2021 and 68 by 2028.
The controversy will intensify as an increasing number of people expect to have to work beyond the normal retirement age. Up to now the majority of employees have accepted 65 as the norm but there is evidence that this assumption is being challenged. Employment Tribunals have established that compulsory retirement ages and ‘fixed term contracts based on age’ may in some cases be considered to be ‘age discrimination’.
The Equality (Miscellaneous Provisions) Act 2015 provides that employers may only set a mandatory retirement age based on ‘reasonable and objectively justifiable’ grounds, for example:
- Creating labour market opportunities
- Updating skills and competencies by recruitment
- Balancing the age profile of the organisation by encouraging recruitment of young people
- motivating staff by creating promotional opportunities
- Health & Safety of employees and the public when filling safety critical jobs – train drivers, firefighters
Employers should put in place a contractual retirement policy, which includes the ‘objective justification’ argument.
The employer must be able to demonstrate that a normal retirement age does exist; that it had been communicated to the relevant employee; and that it has been consistently applied across the organisation. The Employment Policy should outline how requests by employees to work beyond the normal retirement age will be handled.