Managing a changing workforce

Introduction

An ageing society is no longer coming tomorrow - it is here with us today.

Managing an ageing workforce demands a careful balance between individuals' needs and an organisation's needs. It requires a proactive and creative approach in finding workable solutions which are fair and non-discriminatory.

With the removal of the Default Retirement Age (DRA), employees now have more choice about when they stop working and retire. Also, people are living longer and lead healthier lives. The age at which people can receive a state pension is increasing and because of the current economic climate, people have concerns about their financial position in retirement. All of these factors mean that more employees will want to work longer and retire later. Employees will be thinking more about the options available to them with regard to working arrangements as they plan their later working life and move into retirement.

Approaches to retirement

Any 'employer-forced' retirement is direct age discrimination and therefore unlawful unless it is justified. An unjustified compulsory retirement would also amount to an unfair dismissal.

In order to justify a retirement, councils will need to show that the retirement is a proportionate means of achieving a legitimate aim (see section 3.0 of Good Practice Guide). Such aims might include: the health and safety of employees and service users, workforce planning and maintaining capability standards. However, employers must be careful not to make any assumptions about capability declining with age. Further, even if there is a legitimate aim, the employer must still be able to demonstrate that the means of achieving the aim is proportionate, ensuring that the discriminatory effect is outweighed by the need to achieve the aim.

Where an employer sets a retirement age that it seeks to justify, this is often referred to as an Employer Justified Compulsory Retirement Age (EJCRA). However, all compulsory retirements will be unlawful unless justified as a proportionate means of achieving a legitimate aim, whether or not the decision to retire an employee is made on an individual basis or in line with a wider EJCRA.

There are three approaches which employers could take towards retirement:

1. Seeking to retire employees under an organisation-wide retirement age

In theory it is possible for an employer to set an organisation-wide retirement age. However, the LGA does not recommend that councils set and retire employees in line with an organisation-wide retirement age as an organisation-wide retirement age will be extremely difficult to justify across such a wide range of jobs and employees. The local government workforce is not uniform and various factors such as health and safety, capability and workforce planning will impact differently on each employee according to their circumstances.

2. Setting a retirement age for particular groups of workers

There will be particular groups of employees performing the same duties, for which employers may want to set an EJCRA. For example, for posts in services where a significant level of physical fitness is required or in other occupations with exceptional mental demands, for example, supervising children or operating machinery. In such cases, the justification would be based on the aims of maintaining health and safety and capability standards.

Crucial to satisfying these criteria would be evidence that at the retirement age and onwards, health typically deteriorates to the extent that employees could no longer perform the role safely and to the required level of capability. However employers should be careful to avoid assumptions about this (please refer to HSE guidance). It shouldn't be assumed that certain jobs will be too demanding for older workers. Decisions should be based on a detailed assessment of capability requirements and objective risk.

Another reason for setting an EJCRA for a group of workers includes workforce planning. For example, an employer may want to retire older employees from more senior posts to ensure there are reasonable employment and promotion opportunities for other workers.

3. Considering retirements individually on a case-by-case approach

Rather than seeking to operate a compulsory EJCRA across an organisation or for groups of employees, it is the LGA's view that it will be better for many employers to manage retirement issues individually. In practice this would mean that it will be for each employee to consider when and how they would like to retire in a workplace discussion with their manager. Having regular conversations with all employees about expectations, their performance and future plans are invaluable. Asking open questions, such as "What are your aims and plans career-wise for the next year or two?", for example, should avoid any suggestion of discrimination.

However, should the employer want to compulsory retire an employee on an individual basis the employer will (as is the case for an employer-wide or group EJRA) still have to show that the decision to retire the employee is objectively justified.

LGA believe that good people management is the best way to adapt to the removal of the DRA. It is essential that managers hold regular discussions and appraisals with every person in their team regardless of their age to discuss performance, learning and development needs and to talk about future work and career plans (section 2.9 ). If performance is the underlying issue, then it should be treated as such in line with the council's managing performance policy. Treating older workers more favourably due to their age is also discriminatory (section 4.0 ).

Councils should consider where possible offering and allowing more flexible working packagesincluding working part time and from home (section 5.0) to assist employees who are unable, or choose, to work in a non-standard way and this should be done in a way which is equally accessible to all staff regardless of age.

Age should be promoted in a positive way as well as the various options for employees, such as phased retirement; working differently - reducing working hours and changing roles. (see section 5.0).

Key points

• An unjustified compulsory retirement by an employer will amount to an unfair dismissal, and age discrimination under the Equality Act 2010.
• You must be clear on the operation of ‘fair dismissal' procedures for all employees (regardless of age).
• Review policies and performance management. Ensure that your performance reviews, including where this is dealt with by informal discussion, are delivered in a meaningful way to employees, regardless of their age (section 4.0).
• Do not rely on contracts of employment that state a compulsory retirement age of 65 or above to retire people - there is no need to issue new contracts of employment to all employees but you should, if not already done, notify employees of the changes to the law.
• Communicate with employees to consider both their future aspirations and discuss those of the service area (section 2.9).
• Provide training for managers to ensure they are able to manage employee expectations (section 8.0).
• Conduct routine risk assessments for people of all ages. When factoring age into a risk assessment, don't assume that certain jobs will be too demanding for older workers, base decisions on capability and objective risk.
  Conduct routine risk assessments - guidance on the Health and Safety Executive website
  HSE guidance on managing aged workers - guidance on the Health and Safety Executive website
• Consider how workforce planning, succession planning and recruitment are handled (section 6.0 and 7.0).
• Offer and allow more flexible working packagesincluding working part time and from home.(section 5.0) Promote age in a positive way and promoteoptions for employees, such as:
  - Phased retirement
  - Working differently - reducing working hours
  - Changing role
• Managers must not discriminate against any worker on the grounds of age - give due consideration to younger workers too.

Other resources

A guide to working without the default retirement age (ACAS) - PDF on the ACAS website

Joint Council for Wales good practice guide

HSE guidance - on the Health and Safety Executive website

HSE commentary - on the Health and Safety Executive website