Abolition of retirement age leaves less opportunity for young workers, say employers

One-fifth of employers say that they will have less capacity to hire young workers once the default retirement age (DRA) is phased out.

According to previews of a report to be published next month by international law firm Norton Rose, nearly half of employers believe that the abolition of the DRA will have a negative impact on their business, with 22% citing the biggest practical impact being a reduced capacity to take on younger staff.

This comes as the latest labour market statistics from the Office for National Statistics revealed that youth unemployment rose by 78,000 over the quarter to July 2011 to reach 973,000.

Transitional arrangements for the removal of the DRA came into force on 6 April 2011, meaning that employers could no longer issue new notifications of retirement using the DRA unless they could objectively justify it as a proportionate means of achieving a legitimate aim.

Of the 125 employers surveyed, 11% had taken, or were considering taking, legal advice on whether or not they could continue to enforce retirement, and 10% were looking at encouraging retirement by offering a financial package.

Paul Griffin, London head of employment at Norton Rose, believes that too many employers are trying to tackle the changes with “blunt solutions”.

Griffin told Personnel Today: “Employers have clearly got to be thinking of their retirement agenda and they’ve got to decide how they can encourage people to make choices based on their career. The wrong approach, the blunt approach, is to target those who are 55 to 65 and say ‘how about retirement for you?’.”

He added that employers should make sure that all staff are aware of options such as flexible working, changing job roles or working part time, so that they can make an informed choices about their retirement.

The report also found that three-quarters of employers admitted they had not given their line managers any additional training on how to approach the scrapping of the DRA.

Griffin warned that this could cause problems if an age discrimination case was taken to tribunal in relation to the abolition of the DRA.

“A lot of people may not actually know, or they may have forgotten, that there’s no such thing as retirement at 65 anymore, and if you’re not actually training people then they’re going to approach these situations as they did before,” he said.

“The legal issue is that, in relation to any sort of discrimination case, the first thing a tribunal will ask the manager is ‘have you received training in this particular area?’ and, if the answer is no, then the employer will be on the back foot.”

Find legal information on retirement and the abolition of the DRA on XpertHR.

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