The UK workforce is getting older and older. Recent statistics from the ONS show that people are working into their seventies because of improving health and increasing financial need. A Prudential survey found that almost a quarter of people who are planning to retire this year do not feel ready to give up work. What can employers do if employees fail to jump? Can they push? The short answer is 'no', but retirement expectations can be managed, although there are risks.
The default retirement age of 65 ended on 5 October 2012. Its removal has made it very tricky for an employer to discuss retirement with an employee without landing on the wrong side of the law. Arranging a meeting with a 60+ employee to discuss retirement 'out of the blue' might well lead to claims against that employer on grounds of age discrimination.
If there is no performance failure, misconduct issue or redundancy taking place within the business, then the only conclusion to draw is that the conversation has been instigated because the employee has reached a certain age. That would be a clear breach of the law which requires all employees to be treated equally. Employers that selectively apply these discussions risk facing an Employment Tribunal, or a paying a sizeable severance settlement for the employee to leave quietly.
This places employers in a very difficult situation; on one hand, it is rather bizarre to be having a retirement age discussion with employees at the beginning to mid-part of their careers; but on the other, it is important to have an on-going conversation with employees about retirement, long before they reach the apposite age.
A fairly formalised annual appraisal system would enable an employer to discuss performance, career expectations, long-term goals, health and retirement on an annual basis with all employees, and allow for the substance of that discussion to change as the employee progresses through their career.
For example, the discussion with an employee at the beginning of their career might be around training and promotion. A discussion with an employee towards the end of their career might be around handover of clients and contacts, and a mentoring of more junior employees. It may even extend to size of pension pot and retirement plans.
Avoiding unpleasant situations is all about laying the groundwork and enabling both sides to understand each other's expectations around all aspects of the employment relationship, which include retirement.
Jonathan Maude is an employment law partner with international law firm, McGuireWoods.