Policy Guide: Working beyond 65

The Default Retirement Age (DRA) has been removed under The Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 (SI 2011/1069). No more compulsory notices of retirement can be issued and the statutory procedure has been removed.
The main argument for removing the DRA was allowing older people freedom of choice. Many older people enjoy their work and want to continue working beyond the state retirement age. Increasingly, older people are concerned about the potential financial difficulties of surviving on a pension and therefore want to continue working for financial reasons. A DRA of 65 years was seen as an arbitrary bar without any reasoning behind it.

What has changed?
The main points are as follows:
•    the DRA ceases to exist (effective 1 October 2011)
•    the procedure has been abolished
•    organisations may seek to operate a compulsory retirement age only if it can be objectively justified (this is unlikely to be possible in a nursery).
•    The change is in the ability of an employer to require retirement. Nothing will prevent a member of staff from 'retiring'

What are the alternatives to retirement?
There are many desirable policy objectives for the removal of the DRA. But there will be management concerns for nurseries which would have preferred to see an employee retire with dignity at the DRA.
Unless an employee leaves voluntarily, if a nursery wants an employee to leave, whatever their age, it is only possible by a dismissal for a potentially fair reason (conduct, capability, illegality or some other substantial reason), having followed a fair procedure. Dismissal of an employee in these circumstances is less dignified than retirement and can lead to conflict. Discussions about the future and negotiated settlements to agree departures are therefore likely to increase, impacting on costs.
Older workers can voluntarily retire at a time they choose and draw any occupational pension they are entitled to. Employers cannot force employees to retire or set a retirement age unless it can be objectively justified.

What can I do if an employee had indicated that they will retire on a certain date but then do not do so?
If an employee has given formal notice to leave, you are under no obligation to let them withdraw their notice. However if an employee tells you during a discussion that they are planning on retiring, they may change their minds before formal notice is given.
Where an employee decides not to retire and no notice has been given, the first thing to do is to discuss with the employee their reason for not retiring. This can help to establish whether there is any issue that you, as an employer, might be able to help them overcome, thus allowing them to retire on the due date or shortly thereafter. Ultimately however, if they decide that they do not wish to retire, for whatever reason, then you cannot compulsorily retire them as this will leave you open to a complaint of unfair dismissal.

What steps should nurseries take to address these changes?

Review retirement procedures
Employers need to ensure that they have appropriate retirement policies. Employers need to think how they will manage retirements in the workplace and help employees who want to retire to prepare for this significant change in their life.

• Review any benefits related to age

Some employers provide group risk insured benefits such as income protection, sickness and accident insurance and private medical insurance for their employees. These benefits are not included in the principle of equal treatment on the grounds of age, so it is possible for these benefits to be withdrawn once an employee reaches the age of 65 years. The age at which group risk insured benefits can be withdrawn will increase in line with increases to state pension age.

• Educate line managers about retirement

Managers need to understand the law relating to retirement so that they can plan their skill requirements effectively. It is also important they understand how they should manage someone who is older in age and that they are aware of actions that could be interpreted as discriminatory and could end up being costly for the nursery.

Jacqui Mann is managing director of HR4Nurseries