As we live for longer, the concept of retirement is changing. The traditional idea of a life of leisure for the over-65s is becoming less common. Instead, many continue to work, both to keep their mind active and to provide income in a period that can now potentially last a third of a lifetime.
A new age
So the end of the Default Retirement Age (DRA) of 65 in October this year is being greeted as good news by some. Since 6 April the new rules have begun to be phased in and anyone who is 65 or over by 30 September 2011 can no longer be fired on the grounds of age. With an estimated 850,000 over-65s already in employment, the case for removal of the DRA is a strong one.
Yet some employers are concerned that the new rules will have repercussions on their business, arguing that the DRA has been scrapped too quickly. Judging when someone is too old to carry out their job properly can be difficult, particularly with the threat of an unfair dismissal case hanging over them if they get it wrong.
Another worry is that young people won’t be able to find work as jobs will be held for longer. However, supporters of the law say it will have the opposite effect and actually encourage a more flexible labour market.
Of course, many companies have already worked out how to deal with the DRA voluntarily, and in reality less than a third of companies were still insisting on retirement at 65 when the new law kicked in. In addition, as the legislation was announced back in July 2010, there has actually been plenty of time to put in place new procedures.
Banishing the DRA is another step towards equality in the workplace. And, as many employers are well aware, senior workers offer one of the most valuable commodities in the labour market – experience.If you would like more information about the implications of the DRA, either as an employer or employee, please contact your adviser who will be happy to help