Retirement age delays will hinder employers

Age discrimination legislation raises practical issues for HR professionals.
They will have to review recruitment, selection and training procedures and
consider how, depending on the way it is implemented, it could impact on pay,
pensions and benefits policies and practices, as well as redundancy and
retirement arrangements.

These potentially wide-ranging practical implications, and the associated
change in cultural attitudes in the workplace, demonstrate how important it
will be for the Government to provide employers with the maximum possible time
between finalising the details of this legislation, and its implementation. It
was therefore encouraging when the Government indicated that it would do just
that in October, meaning employers would have two years to prepare for its
implementation in October 2006.

But it now seems the process will be delayed and possibly caught up in the
commotion that will occur if the Government holds a General Election in May
2005. Instead of having two years to prepare for this complex legislation,
employers could end up with around 12 months.

The main reason for this delay is the Government’s indecision over the
policy it should adopt on the retirement age. Opinions seem divided between
those supporting many employers’ views that there should be a default
retirement age of 65, and those who believe there shouldn’t be a retirement age
at all. While this isn’t the only decision to be made, it will have a
significant bearing on the extent of the practical implications for employers
of age discrimination legislation.

Our members strongly feel there should be a retirement age of 65 to avoid
some long-serving staff facing an undignified departure if their performance
gradually deteriorated towards the end of their career. It has been argued that
performance appraisal systems could facilitate this process and avoid unfair
dismissal claims. But there is a danger that this could be seen as a tool to
justify dismissals, rather than a constructive mechanism for improving employee
performance.

If the Government decides against a default retirement age, UK employers
will suffer the competitive disadvantage of being saddled with retirement
arrangements that will create a more onerous regulatory environment.

One reason why parts of the Government advocate not having a default
retirement age is because they believe the changing pensions environment means
an increasing number of people will stay in employment for longer, because the
future level of occupational and state pensions means they won’t be able to
afford to retire.

UK employers need a default retirement age to avoid an international
competitive disadvantage. The Government must not use age discrimination
legislation to try to solve the UK’s pensions problem.

By David Yeandle, Deputy director of employment policy EEF

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