Increasing retirement age could lead to legal pitfalls

Raising the retirement age could wrap employers up in costly red tape when it comes to hiring and firing older workers, experts say.
 
   

According to Croner, the business information and advice provider, employers could face many legal pitfalls if the retirement age is raised as a way of solving the UK’s pension shortfall.

Croner said employers could face claims of unfair dismissal, disability discrimination and age discrimination if they dismiss an employee, or refuse to employ someone, for reasons relating to their age.

Richard Smith, HR expert at Croner, said the problem of the pension deficit shouldn’t be dumped on employers.

He added that if the retirement age was increased, it could end up costing businesses that believe they have no option but to hold on to older workers for fear of employment tribunal claims.

A recent Croner survey revealed that 85 per cent of HR professionals believe the statutory retirement age should remain at 65.

Smith said: “Raising the retirement age by compulsion does not make economic sense for most businesses and should not be used as a solution to our pension problems. 

“Employers have enough red tape to deal with already, and raising the retirement age opens up a minefield of litigation over the treatment of ageing workers.

“It’s an unfortunate reality that as we get older, some people, especially in manual professions, may no longer be capable of doing their job to the same standard,” he said. “But an employee’s right to claim unfair dismissal stops once they reach 65, meaning employers can allow older people to continue working knowing that they can legally bring such arrangements to an end if they wish.

“However, if the retirement age was increased, it is likely that so too would the age at which an employee can raise a claim of unfair dismissal, meaning employers would no longer have a ‘get out’ clause to dismiss workers when they reach 65,” Smith explained.

“This could lead to employers treating older workers more harshly during recruitment, believing that refusing employment in the first place is less risky than having to ultimately dismiss an unsatisfactory older worker.”