Employers will no longer be able to use retirement as a means of “managing out” older workers. Could lead to a leap in discrimination claims
On July 29 the UK government announced plans to abolish the default retirement age (DRA).
From October 1, 2011 employers will no longer be able to lawfully use “retirement” as a reason for removing employees from service.
This decision will have significant repercussions for a company’s HR, compensation and benefits strategy.
Pensions advisor Mercer explained how this will affect companies.
Employers will no longer be able to rely on a fixed retirement age to manage out older workers, said Mercer. “Clear performance objectives and mature conversations about future employment plans will be required to avoid potential age discrimination claims.”
Employees working beyond the current retirement age could restrict the flow of younger talent into organisations. “This could result in capable employees going elsewhere to further their careers,” said Mercer. “As result, engaging and managing talent will become more important than ever.”
For Mercer’s full report click here.
