Saturday, 26 September 2009

Ruling on the Default Retirement Age in the UK

The CIPD - Chartered Institute of Personnel and Development have issued a Press Release late on the 25th September entitled - "Heyday ruling damaging for business, says CIPD"

This is as a result of the The High Court upholding the law that allows UK employers to force workers to retire at the age of 65. In the UK, a worker can see their employment end at the age of 65 without any redundancy payment - even if they do not want to retire. The judge in the case said there was a compelling case for the compulsory retirement age to rise.

The CIPD says...
Responding to today's High Court ruling on the default retirement age, the Chartered Institute of Personnel and Development (CIPD) is disappointed that the Court has upheld the British Law allowing employers to retire workers against their wishes when they turn 65. The CIPD has consistently called for the removal of the DRA for the pressing economic, social and business reasons.

CIPD Diversity Adviser, Dianah Worman says:

"The ECJ has missed a trick to resolve this issue once and for all. The government itself has admitted that the days of the DRA are numbered. It seems counter-intuitive to drag this decision out even further while thousands of older people will be forced out of work in an already difficult jobs market.

"As the HR body we do not buy the HR argument that businesses can't manage their workforce without the DRA. If you have poor performers in your organisation you should also have the performance management systems to deal with them. You wouldn't wait 25 years to remove a poor performing 40 year-old.

"Additionally, business should recognise that this ruling only states that companies can legally retire staff at 65 if they want to. Many organisations and several government departments have already done away with compulsory retirement ages because they recognise the value of retaining older workers and the CIPD encourages all businesses to follow suit.

"We will continue to push for the removal of the mandatory retirement age, both through the current Equality Bill and when the government conducts its own review next year."

CIPD research conducted earlier this year found that 1 in 5 employers planned to enforce the DRA more rigorously in order to reduce headcount*.

*Labour Market Outlook, Winter 2008/2009 . End of CIPD Release.

According to BBC News: Age Concern and Help the Aged, which challenged the rules, will not appeal because they are expecting this law to change.

Employers welcomed the ruling because as a result of the court's decision, it means that a string of compensation cases brought by people who did not want to retire is doomed to fail. The Government has announced it is bringing forward a review of the compulsory retirement age anyway, by a year to 2010. The charities believe that this will eventually lead to a change in the rules.

At present under the current law, a British employer can dismiss a member of staff without redundancy payments on that employee's 65th birthday, as long as they stick to the correct procedure. The charities believe this is in breach of the EU's Equal Treatment at Work Directive.

No comments: