Managing retirement

On the 6 April 2011, there was a change to the law relating to retirement. The effect of this change is that in most cases workers can now retire when they are ready, rather than when their employer decides. It is direct age discrimination to require or persuade a worker to retire because of their age unless you can objectively justify doing so.

If an employer has served a retirement notice on an employee before 6 April 2011, the old rules will apply. These are set out below. This is important because, under the old rules, it was not age discrimination to force an employee to retire if you followed the correct procedures. Under the transitional arrangements, the old rules will continue to apply if you gave an employee 6 - 12 months notification before 6 April 2011 and they had already reached 65 (or any higher Normal Retirement Age), or would reach this age before 1 October 2011 - unless you are operating a lower Normal Retirement Age which can be objectively justified.

Retirement age is not necessarily the same as pension age – the age when a person becomes entitled to their pension. Equality law does not affect the age at which someone gets the state retirement pension. Neither does equality law affect the age at which a person can receive any occupational pension, which is decided by the rules of the pension scheme. Some workers may continue working beyond the age when they become entitled to a pension.

This part of the guidance first looks at the position from 6 April 2011.

  • What is a legitimate aim?
  • Is setting a retirement age proportionate?
  • Discriminatory retirement because of other protected characteristics
  • Good practice in managing an older workforce

The guide then looks at the old retirement rules:

  • Retirement age and the importance of procedure
  • Giving your employee notice that you want them to retire
  • What happened after notifying the employee
  • What happened if the procedures were not followed
  • Normal and Default Retirement Ages
  • The transitional retirement rules

The position from 6 April 2011

It is direct age discrimination to require or persuade a worker to retire because of their age unless you can objectively justify doing so. It is important to avoid making general assumptions about an individual person’s capability and job performance at any particular age. This applies whether you are setting a general retirement age for all workers in a particular job (often known as a 'Normal Retirement Age') or choosing to retire an individual at a particular age.

In removing the general default retirement age, the government said that no one should be deprived of the opportunity to work simply because they have reached a particular age. In most circumstances, it will not be objectively justifiable for you to set your own retirement age instead. To objectively justify doing so, you would need to be able to produce convincing evidence to show, in relation to the particular job:

  1. that you are trying to achieve a legitimate aim
  2. that the policy of setting a retirement age is a proportionate way of achieving that aim, and the actual age chosen for retirement is also proportionate.

Proving that a retirement decision is a proportionate means of achieving a legitimate aim might be difficult to demonstrate in many situations.

What is a legitmate aim?

This depends on the nature of your business and the jobs involved. Legitimate aims for having a retirement age might include:

  • maintaining health and safety standards. For this to be a legitimate aim, there needs to be a real health and safety concern, based on a proper assessment of risk, and not an imagined one. The risk must relate to a specific activity and must also be at a higher level than the level of risk which normally exists in everyday life.
  • in limited circumstances, providing sufficient opportunities for promotion, thereby encouraging staff to stay. This will only be a legitimate aim if there is evidence of a genuine problem caused by promotion opportunities for workers (of any age group) being blocked by older workers not retiring - for example, in small organisations genuinely operating on a fixed budget. If sufficient promotion opportunities for a specific type of post already arise from normal staff turnover, this would not be a legitimate aim.
  • facilitating workforce planning (that is, ensuring you have the personnel in place to meet your future business objectives), so that there are realistic expectations as to when certain vacancies will arise. This is only likely to be a legitimate aim in a small minority of organisations. You would have to be able to demonstrate that, given the nature of your organisation, you cannot properly achieve your business aims without advance information about future vacancies.

Is setting a retirement age proportionate?

Even if you can establish a legitimate aim, you would need to show that it is proportionate

  • to set a retirement age at all
  • to set it at the particular age you have chosen.

First, you should be able to demonstrate that there are no less discriminatory alternatives to having a compulsory retirement age. For instance, even where an employer can demonstrate a legitimate aim of workforce planning in relation to distribution of workers in different jobs and promotion paths, in organisations where there is a reasonably high turnover of staff imposing a retirement age will not be a proportionate means of achieving this aim. Workers come and go for all kinds of reasons and it is likely to be disproportionate to attribute workforce planning difficulties or promotion blockages to lack of a retirement age, except in limited circumstances. For example, in very small organisations with a majority of long-serving workers, there may occasionally be situations where promotion blockages genuinely need to be resolved in order to retain specialist staff for particular jobs.

In considering whether a retirement policy is objectively justified, you cannot rely on assumptions and generalisations: you need to be able to produce evidence. Remember that the means of achieving your aim will not be proportionate if the same aim can be achieved in a less discriminatory way.

A bus company imposes a retirement age of 72 on their bus drivers. They have a legitimate aim, that of ensuring the health and safety of passengers. However, the retirement age may not be proportionate if regular medical and performance tests for individual drivers would provide a less discriminatory way of avoiding the risk of sudden incapacity. To show that it is proportionate to have a compulsory retirement age, the employer would need evidence that this approach is the least discriminatory way of dealing effectively with the health and safety risks they have identified.

Second, even if you are confident that having a retirement age for certain jobs in the organisation is a proportionate approach, you must then carefully select the age of retirement to make sure that it discriminates to the least degree possible.

A sports authority decides that the referees it employs must retire at the age of 48 in order to ensure they are of high quality and maintain performance standards. Although this aim is legitimate, the imposition of a retirement age is unlikely to be proportionate. This is because quality can be tested on an individual basis by annual fitness tests and ongoing performance assessments which all referees have to undergo in any event. The authority has no evidence that performance or fitness drops off at 48. Even if having a retirement age were an appropriate means of achieving the authority’s aim, in these circumstances choosing the age of 48 is unlikely to be proportionate.

Acas has produced guidance for employers:
Age and the workplace: Putting the Equality Act 2010 and the removal of the default retirement age (DRA) 2011 into practice

It discusses issues surrounding planning ahead and performance management of older workers.
 

Discriminatory retirement because of other protected characteristics

Even if you are able to justify setting a retirement age so that it does not amount to age discrimination, you must still avoid discriminating against people because of other protected characteristics. For example, you must not allow men to work longer than women or select someone for retirement because they have a disability.

The information elsewhere in this guide tells you more about unlawful discrimination and how to avoid it.

Good practice in managing an older workforce

Managing performance

You need to be careful not to make assumptions that workers’ performance will deteriorate as they get older. Research shows that older workers’ productivity does not usually decline at least up to the age of 70 where the same level of training is provided as for younger workers.

If you do have evidence for concerns about the performance of an older worker, you should treat them in the same way that you would treat any younger worker whose performance was giving you concern. It is discriminatory to fail to address performance concerns because you are making assumptions that older workers will be leaving soon. It is also discriminatory to be harder on older workers than others, for example because you would like to encourage them to leave or because you are making assumptions about their capacity to improve. Any performance management system you have should be fair for all your workers.

With physically demanding jobs, it is especially important to have good health and safety procedures and safeguards in place to protect workers of all ages. For older manual workers with jobs that are physically demanding, it may be a good idea to have periodic medical checks to address any health and safety concerns about their ability to continue in that role. If a manual worker is having difficulties performing their job, it may be possible to offer them a transfer to a less physically demanding role – possibly a non-manual job. Where there are no suitable alternative roles, you should use your normal procedures for addressing concerns about a worker’s capability.

Developmental and training needs and future plans

You should not make assumptions about workers’ developmental or training needs based on their age. In particular, do not assume that older workers would resist training in new areas. You should discuss older workers’ needs and aspirations with them just as you would with other workers. As with workers of all ages, it is good practice to ask them what form of training they would prefer, eg one-to-one on the job, in a group session or self-taught on computer.

It is also good practice to have a formal time, eg in an annual appraisal, when each worker can discuss their future plans and aspirations. Older workers should not be excluded from this opportunity. You can initiate a discussion about a worker's future plans provided you raise this in a neutral way and do not treat anyone less favourably because of their reply. These days, many workers of all ages would like the chance to work flexibly or reduce hours. Having a flexible working policy that applies to everyone is good practice and avoids the risk of discrimination.

But it would be discriminatory for you to assume that an older worker wants to reduce their hours, or for you to pressurise an older worker into working shorter hours. It is also important that older workers are able to explore options with you in conversation without being pressurised subsequently to reduce hours just because they mentioned it as a possibility.

Sickness

A worked aged 65 or over who is absent through short or long-term sickness should be treated in the same way as any younger worker. If a worker is on long-term sickness absence, you should consult with them and obtain informed medical advice as to when they might be able to return, or any adjustments to the workplace which would enable them to return earlier.

Insured benefits

You are allowed to stop offering group insured benefits, eg private medical cover or life assurance, to workers who have reached the age of 65 (or any older state pension age) even if they carry on working for you - provided this does not breach their contract of employment.

The old retirement rules

This section of the guidance is only relevant for employers who have given a valid notice of retirement to an employee before 6 April 2011, as the old rules will continue to apply in this situation. You do not need to refer to this section otherwise.

Read guidance on the old retirement rules

More information

back to top