The ageing of the UK’s workforce is well publicised: the number of people aged 65 or above in the workforce has increased from just over 870,000 at the end of 2011, to 1.1 million by mid-2014 (according to the Office of National Statistics). The challenges posed by this changing demographic are twofold: for as long as employees remain in the workforce, employers will want to ensure that they are capable, engaged and productive. However, employers will also want to be able to bring that relationship to an end when this becomes necessary, and to do so in a way which safeguards the individual’s dignity and mitigates legal risk. To what extent is this possible in an environment in which differential treatment of employees on grounds of age may give rise to allegations of discrimination?
The challenges posed by an ageing workforce have been well rehearsed, and in many cases there will come a point in an individual’s career when their ability to perform to the best of their ability begins to decrease (though of course there is significant value to an organisation in retaining experienced employees for as long as those employees are willing and able to work). Furthermore, succession planning becomes incredibly difficult if there is no certainty as to when employees will retire, and employers may be reluctant to initiate conversations with senior employees regarding handing over the reins.
Much of this reluctance undoubtedly stems from a concern about the possibility of allegations of age discrimination. Compensation in respect of a claim for age discrimination is uncapped, and six figure awards have previously been made.
There are a number of tools available to employers that wish to address the issues of retirement and succession planning head on. It is of course open to an employer to have a contractual retirement age, so long as this can be objectively justified. Furthermore, employers should feel relatively comfortable about asking employees about their future plans for the short, medium and long term, so long as this is done consistently across the board. Such questions could, for example, be built into the appraisal system to be asked of all employees about their aspirations for the future (rather than focusing on retirement). Employers should also bear in mind that many individuals reaching ‘retirement age’ will actively want to retire, and may welcome an open conversation about their next steps. These discussions are incredibly important, and it is always worth taking advice in advance.
Conversations around age, its impact on a person’s ability to do their job, and voluntary retirement are undoubtedly difficult to broach and may feel risky. However, employers who don’t tackle these matters head on are not only failing to deal with any immediate issues, but are also storing up a greater problem for themselves in the medium to long term, as the proportion of their workforce reaching ‘retirement age’ increases. The good news is that employers can to some extent mitigate such future difficulties by working to ensure that the difficult issues and conversations are dealt with in a transparent and constructive manner.
Posted on 12/12/2014 in Legal UpdatesBack to Knowledge