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January 21, 2011

Scrapping of default retirement age could cause rise in discrimination claims

Business groups have voiced concerns that the confirmed plans to scrap the default retirement age (DRA) by October 2011 will cause a rise in age discrimination claims, writes Clare Bullock.

From 6 April 2011 employers will not be allowed to issue any new notices of retirement, while any prior notices must take effect before 1 October 2011. From then, businesses wanting to terminate employment of an older employee must have a reason other than age, unless they can show there is a legitimate aim underpinning the retirement policy, such as health and safety concerns.

Business groups gave mixed reactions. The Confederation of British Industry criticised the Government for not providing guidance earlier on working without the DRA. The Chartered Institute of Personnel and Development (CIPD) welcomed the news, saying that employers have nothing to fear from this legislation, but that it will bring challenges.

CIPD employee relations adviser, Mike Emmott, said: “There are bound to be more unfair dismissal claims in the short term because discrimination claims are among the easiest to bring.

“The onus of proof falls on the employer to show that the employee was not dismissed because of their age,” he added. “Employers must discuss performance issues with the employee and, if necessary, ask for the worker’s thoughts on when they would like to stop working. Looking forward to the cliff-edge of retirement business owners have sometimes ducked the issue of employee performance and let it run on until retirement takes the problem away.”

Owner of small business H&R Hughes Solicitors LLP, Hilary Hughes, said: “It’s one more layer of bureaucracy that we don’t need.

“The danger for small businesses is that if an employee claims age discrimination, the money that they could get is unlimited,” she added. “Many employers end up paying large sums of money regardless of whether they’re right or wrong because they can’t afford a tribunal. Fighting a case, even where employers think they have a good chance of winning, is expensive. Then you add in the staff time and the uncertainty – and employers pay up.”

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