The abolition of the default retirement age (DRA) has been a long time coming. Sian Thomas, director of social enterprise organisation Synuron, examines why there have been calls to delay it and offers practical guidance on how to prepare.
This week’s decision by the Government to scrap the DRA from 6 April 2011 has been discussed for more than 10 years. The UK is one of the few countries to have still have a DRA in place with employers such as Marks and Spencer having scrapped their schemes many years ago.
Why then, after years of the HR profession lobbying for a change with many benefits economically and socially, have there been calls to delay it?
The outcome of the consultation last year by the Government was inconclusive; employers either thought scrapping it was a good thing or were already suitably prepared. It has been estimated that four times as many people have been retired since knowledge of the DRA change has increased, compared with before.
At a time when corporate headcounts and the shape of the labour market need to be more certain for organisations to be competitive, scrapping the DRA actually makes the situation less clear.
After 1 October 2011 there are many workforce issues which become a corporate risk as a result of this change.
By 6 April, employers will need to decide whether or not staff who are aged 65 before the 1 October will retire under the current arrangements. Many have already put their house in order and written to such staff or have had a clear policy for many years that sits well with the new arrangements. However, many have not.
There are now 12 weeks to go and many senior HR professionals, especially in the public sector, are currently agreeing corporate plans with their boards. One NHS HR director I spoke to recently has given notice to around 200 staff this year.
My advice to employers is as follows. Take a short term plan to your management team with the numbers and use the advice pages on Personnel Today and XpertHR, which I think are the most comprehensive. Join a network of other employers to debate the issue and, in the absence of a government code of practice (there may well be such a thing but it isn’t available now), develop this with other like-minded people in your sector.
This will help you think through the issue of justification for dismissals or procedures for review. The Government has indicated that the matter for justification is for the employer (police officers have been given as an example). It is potentially a legal minefield.
Some have called for the Government to fill the void with guidance and even change the unfair dismissal rules. Guidance published by the Government and ACAS is a first step.
The removal of the DRA will be one of the biggest changes to employment law this year. There is very little evidence that this change will affect younger people entering the job market, as shown by the helpful research paper which accompanied the consultation summary last year. This view is counter-intuitive and one the media in particular will find difficult to grasp.
Demography can, at times, be an area of frustrating uncertainty and there are, without doubt, some unanswered questions. What is certain is that the announcement will drive better practice in performance management and, after ten years of talking about it, the moment has finally arrived.
Sian Thomas is director of Synuron, a social enterprise membership organisation delivering HR innovation in the health and social care sector. She was formerly director of NHS Employers.