Dental Tribune United Kingdom Edition

From October 1st 2011 it will be discriminatory to dismiss by retirement From October 1st 2011 it will be discriminatory to dismiss by retirement March 14-20, 201118 United Kingdom EditionPractice Management The process to be used would be as follows: • Issue the employee with the notice of intended retire- ment date (to be before 1st October 2011) • Enter into ‘without prejudice’ discussions regarding the em- ployee continuing to work past that date • Once an agreed date has been set, enter into a Compromise Agreement with the employee. There are two important com- ponents to the Compromise Agreement: 1 That it is a condition of the Compromise Agreement that the employee signs a second Compromise Agreement (a copy of which is annexed to the first Agreement) at the end of his employment 2 That any payments due un- der the first Agreement are not to be paid unless the second Agreement is signed. The advantage to this approach is that, if the employ- ee refuses to sign the second Agreement, he does not receive any payments due under the firstAgreement. Furthermore,if he does bring any claims for age discrimination as a result of his dismissal at the date agreed under the first Agree- ment, then he will be in breach of contract, and any sums that he claims should be ‘dam- ages’ that the employer can claim back. This relatively simple pro- posal could save employers from the dilemma of choosing between losing valued staff be- fore they are ready, or allowing staff to continue with no clear idea of when they plan to retire. Difficulties Succession planning The most obvious difficulty for employers will be that there is no longer a ready-made timeta- ble for retirement, meaning the path to senior positions could be blocked. Employers may also feel unable to ask when an employee is intending to retire, leading to ‘shock’ retirements that leave the employer without a proven successor. Employee Relations Employers may also find it dif- ficult to start discussions about retirement with employees as detailed above. Even if they do, many employees may not take kindly to the idea that they should retire if they are not ready to do so. In addition, under the ‘old’ law, employees have often been allowed to con- tinue to retirement with manag- ers overlooking lapses in judg- ment or incremental changes in performance which can be attributed to an employee’s age. Moving forward, employers will be faced with the unpleas- ant task of performance man- aging longstanding, cherished employees if they are not up to task rather than allowing them to continue with the knowledge that retirement is just around the corner. This could cause particular problems where em- ployees work as part of close- knit teams, such as in the hos- pital catering industry, with employees becoming known not just to other catering staff, but also to wider hospital staff. In such cases an adverse reac- tion from the employee could prompt a backlash against the catering manager. What is a ‘legitimate aim’? Cases under the ‘old law’ have found legitimate aims to be workforce planning, enabling recruitment and retention of younger employees, avoid- ing adverse impact on pen- sions and benefits, ensuring continued competence, and having an age balanced work- force ensuring job opportuni- ties amongst the generations. However, employers will need to be careful when implement- ing a normal retirement age and will need to show that they have balanced the employee’s rights and dignity against the needs of the business. Flexible Working In practice some employers may be happy to allow an em- ployee to continue working as long as they choose, and many employees will most likely want to at least reduce their hours, if not finish working completely, as they age. It is important to note that the abo- lition of the default retirement age has no effect upon the flex- ible working law which is cur- rently in place, and employers will not be under a duty to al- low older employees to work reduced hours unless they are eligible for flexible working in the usual way. Performance Management In addition to the employee relations issues highlighted above, managers must ensure that performance management processes are implemented fairly across the entire range of employees in order to avoid any accusations of age bias, or trying to force out the older members of staff. In addition, managers will need to watch for age related disabilities and, if any disabili- ty is found, will need to consid- er whether or not any reason- able adjustments may need to be made in relation to the em- ployee and their employment. Exceptions There are two exceptions to the abolition of the default retirement age: 1It does not affect occupa- tional pension schemes and the setting of a “normal retire- ment age” for the purposes of occupational pension schemes. 2Employers may withdraw benefits for employees at or over the age of 65 (with the age at which withdrawal will be legal rising in accordance with the state pension age). This exemption deals with a key concern of employers, name- ly that the rising costs of benefits and insurance for employees over the state pen- sion age could make the provi- sion of these benefits prohibi- tively expensive. Conclusion The abolition of the default re- tirement age has the potential to have a large impact on busi- nesses, as staff may choose to remain in their position longer, hindering succession planning, and employers and managers will be forced in many cases to invoke disciplinary proce- dures to manage the perform- ance of longstanding employ- ees, with a subsequent negative effect on morale. However, where there is clear ongoing dialogue between managers and staff, and all parties are open to sensible communica- tion; there is no reason why employees continuing to work past the current default retire- ment age should prove to be a problem. Indeed, managers may find that retaining the services of a valued, longstanding em- ployee for a reduced number of hours during the working week may allow more junior members of staff to learn from someone who would other- wise previously have retired and to gradually take over their role as they ease towards the date at which they intend to retire. In addition, employers are still free to choose to set a re- tiring age for their business, provided that they are able to justify this. DT About the author David Regan is a solicitor in the Employment Team at Mundays Solici- tors LLP, a leading regional practice which provides quality advice to corporate and pri- vate clients. Es- tablished in 1960, Mundays has a diverse client base that includes major international and national companies as well as smaller businesses, individuals and families. Mundays specialises in Banking, Con- struction, Corporate & Commercial, Dispute Resolution, Employment, Family, Insolvency, Private Wealth, Property, and a wide variety of indus- try sectors. page 17DTß Have you ordered your free Patient Referral Lea ets? Call 0844 335 6354 or visit www.waterpik.co.uk ‘The most obvious difficulty for employers will be that there is no longer a ready-made timetable for retirement’