One aspect of the proposed pension reforms, the need for people to work longer, has long been recognised. People are living longer, with life expectancy 10 years higher than it was in the 1970s. Pension pots, whether part of a public sector defined-benefit plan or an individual’s own money-purchase scheme, are going to have to stretch to cover more years. Without reform to the way we work, this will be unsustainable.
For many people, there will be a move away from “cliff-edge” retirement, by which, at the age of 65, they suddenly stop working and retire. In its stead, a gradual system of flexible work towards retirement will be encouraged.
In anticipation of the abolition of the default retirement age, several concerns arose among employers:
- How can the employment of older staff be terminated?
- Is it not kinder to retire someone rather than put them through a performance process?
- Will any discussions about retirement be discriminatory?
These questions were understandable as the UK workplace entered unchartered territory. Fears arose that people would never leave their jobs. Employers’ knowledge of existing discrimination Regulations caused them to fear that no discussions could take place with employees about retirement.
Discussions with older workers are not merely acceptable, they are to be encouraged. It is quite legitimate for employers to discuss with employees their plans and aspirations, and ask what they would like from the workplace. Very often an employee will welcome a discussion about a work plan leading up to a possible retirement.
Older employees should be performance managed like everyone else. Both Acas and the Government suggest that employers should set out their performance expectations as part of the discussions with the employee. When agreeing a future work pattern with an older employee, it is advisable to let them know what objectives the employer expects to be met. Should an employee not be performing there will then be a clear and measurable plan against which they can be assessed. Of course, to performance manage only older workers in such a proactive manner could itself be discrimination: it should be part of an overall appraisal system with targets and objectives throughout the whole workforce.
One of the most important factors to make such arrangements work will be the ability of employees to request flexible work as they move towards retirement. Again, if only older workers are offered the potential benefit of flexible working, this could be seen as discrimination against younger workers. Employers might need to ensure that the option of making such a request is open to all employees. This fits well with the Government’s recent Consultation on modern workplaces, which proposes that the right to request flexible working be extended to all employees.
In summary, an employer should approach with confidence employees who previously would have been at retirement age. An open and balanced discussion about the employee’s plans and the employer’s expectation can lead to the implementation of an agreed work plan. Although the employer should expect the employee to be no different to any other, should the older employee fail in meeting these objectives, performance management can be implemented. This ability to work beyond the age of 65 is the employee’s right, but should the employer notice that performance is declining it might be best to first have an informal chat. The employee might not want to undergo performance management and at that stage may opt for retirement, ending their career on a high point.
Tom Walker, head of employment and partner, Manches