Kraken Business

Employing older workers

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by

Team Kraken

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The law on retirement is changing from 6 April 2011. This guide helps employers to review their practices for the benefit of the business and its workers. It shows how businesses that already operate without fixed retirement ages benefit from employing older workers. It also refers you to your legal duties and provides good practice.

People are living longer and working longer. At the same time, fewer young people are joining the labour market. By the early 2020s, people aged between 50 and 64 will comprise almost a third of the workforce.

With skills shortages and changing labour markets, it makes sense to utilise all available skills and experience, regardless of a person’s age, and to encourage older workers to stay within the business.

Employers can benefit from employing older workers as part of an age diverse workforce. These benefits could include a reduction in recruitment and training costs, and increased productivity.

Table of Contents

Age legislation and the default retirement age

The law on age and retirement is changing. The Government is phasing out the default retirement age (DRA) from April 2011.

From 6 April 2011, employers will no longer be able to issue notifications of retirement using the DRA procedure. Where notifications have already been made prior to 6 April 2011 in accordance with these procedures, employers will be able to continue with the retirement process as long as the employee is aged at least 65 – or the employer’s retirement age, if higher – before 1 October 2011.

In accordance with DRA procedures, those employees will be able to request to work on beyond their notified retirement date and employers will be able to agree an extension to their employment. If the employer wishes to give an extension that still ends with dismissal under the DRA, the extension must be for a fixed period of six months or less. This is the maximum period allowed without the need to issue a further notification of retirement.

Beyond these transitional arrangements, employers will not be able to rely on the DRA.  This means that employers cannot compulsorily retire their employees, unless the retirement can be objectively justified in their particular circumstances.

In certain cases it might be possible for an employer to objectively justify a retirement age but in order to do so an employer would need to show that they were acting to further a legitimate aim of the business and that their actions to achieve that aim were appropriate and necessary. The employer may need to defend these actions at tribunal, if challenged.

Read more on age discrimination on the Acas website.

Managing an older workforce without a fixed retirement age

Employees of different ages and with varied experience can make a significant contribution to your business. Whether you employ four or 400 staff, successful workforce management requires a balance between treating all workers equally regardless of their age, while responding to their particular strengths and needs at different stages in their working lives.

Employers should ensure that all staff appreciate the business benefits of employing and retaining older workers as part of an age-diverse workforce.

Research shows that older workers generally:

  • have lower levels of staff turnover
  • don’t block opportunities for younger workers
  • have a broad range of skills, experience and ideas to offer
  • can be as productive as younger workers
  • have fewer accidents and lower levels of short-term sickness
  • are as successful in training as younger workers and can help to mentor new starters

To prepare for changes to the age profile of your workforce as employees begin to work beyond traditional retirement ages, you should:

  • understand the age profile of your existing workforce and how changes may impact your business in future
  • consider how to attract and retain older workers to maintain your skills base now and anticipate the future growth of your business
  • encourage your experienced workers to share skills and knowledge, and involve them in training and mentoring new starters
  • ensure all staff recognise that they are managed and valued for the work they do regardless of their age
  • reduce staff turnover costs by looking at ways to help your skilled older workers carry on working, possibly through more part-time or flexible working
  • remember if part-time or flexible working is not open to all, then targeting it at older workers would need to be objectively justified

See the page in this guide on flexible working for older workers.

Recruitment and older workers

Recruiting new staff takes time and is expensive, so it is wise to get it right first time. Review your recruitment processes to ensure you are maximising your chances of taking on the best possible candidates for the job. To do this, focus on the requirements of the job and not the age of the applicants. Workers of all ages, whether younger or older, can offer real business benefits.

To recruit and select candidates from all age groups, you should:

  • Think about where you advertise – use a wide range of media to reach different age groups.
  • Avoid using terms which are simply code for particular ages, such as ‘school leaver’ or ‘recent graduate’
  • Think carefully before using terms that can be associated with particular ages, such as ‘mature’ or ‘energetic’. If you cannot show that these are real and necessary attributes for the post, and not related to age, then terms such as these should not be used.
  • Include your equality policy in the advert and reference your commitment to age neutral policies.
  • Only ask for experience or qualifications if they are essential for the job. Describe the type of experience that is required to do the job, rather than a number of years experience.
  • Consider equivalent qualifications so you don’t exclude people of different age groups.
  • Think flexibly about work patterns to help attract the best range of candidates. Many jobs can be done part time or flexibly.
  • Not make assumptions about a candidate’s ability to do a job based on their age, future capability or their length of service. Age is not generally a good indicator of potential return on investment.
  • Check interview results to ensure no age bias, deliberate or unintentional has influenced the decision.

You can ask for an applicant’s date of birth on the application form to assess how effectively you are attracting candidates of all ages. It is good practice to keep this separately from the application to ensure the selection process is not influenced by age.

You are responsible for ensuring your recruitment agencies comply with age legislation.

You can set an age limit for a job which simply reflects the position set out in other legislation, i.e. where a job cannot legally be done by a person under or over a certain age. For example, serving alcohol or driving passenger vehicles. However, think about whether the job could be adapted first, for example, supermarket checkout staff can be younger than 18, where someone older takes responsibility for alcohol sales.

There are only a limited number of other exemptions where it is legal to set an age limit for recruitment. These are:

  • where someone of a specific age is required for the job – this is called a ‘genuine occupational requirement’ and in practice this is unusual apart from, for example, acting in certain theatre roles
  • in other specific circumstances an employer may be able to objectively justify an age-related restriction

Whether the employer is using a general or a specific exception, the employer themselves would need to be able to defend the age limit if challenged at tribunal.

Training and development for an older workforce

Training can help employees, younger and older, to build on their skills, increase their productivity and keep up with change. It can motivate workers of all ages.

Research shows that where older workers have received the same level of training as younger colleagues, older worker productivity does not usually decline – at least up to the age of 70.

The risk of an employee leaving a company after training or promotion is the same across all age groups. Age, therefore, is not generally a good indication of return on training investment.

To make training and promotion available to all age groups, you should:

  • ensure training opportunities are offered to all employees regardless of their age unless differences in treatment can be objectively justified
  • engage regularly with staff on an individual basis to discuss future training and promotion options that will benefit both your business and your employees
  • ensure all your workers, including older workers, know what training opportunities are relevant to them and encourage them to take part – older workers too often assume training is intended for younger, inexperienced workers
  • monitor outcomes from promotion exercises to ensure age bias has not occurred – it is illegal to exclude an employee from promotion on the grounds of age unless it can be objectively justified
  • encourage mentoring and sharing of skills within your business – draw on experienced workers to support and train new starters and other colleagues

Managing performance and retirement for older workers

The law on retirement is changing from 6 April 2011. From this date, employers will no longer be able to issue notifications of retirement using the default retirement age procedure. Beyond the transitional arrangements, employers will not be able to compulsorily retire their employees, unless the retirement can be objectively justified in their particular circumstances. See the page in this guide on age legislation and the default retirement age.

Two thirds of businesses already operate without a fixed retirement age. This gives employers an opportunity to retain skilled and experienced staff, and opens up on-going work options for older workers. Increasingly, it will be for employees to consider when and how they retire.

Research shows that older worker productivity does not usually decline, at least up to the age of 70, where these workers have received the same level of training as younger colleagues. Older workers also tend to have fewer accidents and take less short-term sick leave.

Older workers do not tend to block opportunities for younger workers. Evidence indicates that there was no positive effect on youth employment from measures which allowed older workers to retire early. Some employers believe that removing older workers to make way for younger workers can damage productivity with the loss of existing skills and experience. This can lead to increased staff turnover and increase the cost of recruiting and training new workers.

To help your business manage without a set retirement age, you should:

  • Plan ahead – use formal or informal performance discussions to talk about on-going work options, retirement options and further skills development. Ask all employees where they see themselves in a year or two to open up discussions about their options.
  • Encourage employees to initiate discussions with their manager at any time to discuss options for continuing to work or retiring. A good time to do this might be after they receive a pension scheme notification about their forthcoming pension entitlement.
  • Ensure all managers are trained in how to manage regular performance discussions to also give feedback, motivate and develop staff regardless of an employee’s age. Reviewing the performance of just certain age groups, younger or older, could raise concerns about unlawful age discrimination.
  • Use discussions to manage under-performance, whatever the age of the employee. Difficulties might be remedied through training, a change of job role, workplace adaptation or a change in working pattern. If poor performance cannot be resolved, follow the normal ‘fair dismissal’ procedures that apply to employees of any age.
  • Review your business retirement procedures and communicate your policies clearly to managers and staff. Older workers should be aware that they can work longer but are not expected to work indefinitely.
  • Consider offering a flexible approach to retirement to help retain key skills for your business. A change in working patterns, reduction in hours or a different role may encourage your experienced older workers to stay at your company and perform more effectively. Remember, if flexible working is not open to all, then targeting it at older workers would need to be objectively justified. See the page in this guide on flexible working for older workers.
  • Think about directing older workers to sources of support which can help them prepare for the financial and personal changes they may face when they retire. Your employees can find information on getting ready for retirement on the Directgov website- Opens in a new window.

Pensions and older workers

The State Pension age is not a ‘retirement age’ – older workers can carry on working past their State Pension age, and continue to work while claiming their State Pension. Alternatively, they can defer claiming their State Pension for at least a year in return for either an enhanced pension, or a lump sum when they do decide to claim.

If you offer a workplace pension scheme to staff, consider reviewing the terms with scheme managers to support members who want to work beyond the scheme’s normal pension age.

Many employers have already adapted their pension arrangements to support flexible, later retirement. For example, some allow contributions to be made to the scheme as long as the member continues to work. Others allow access to alternative arrangements, such as a different scheme.

The Department for Work and Pensions notifies people as they approach State Pension age. Workplace pension schemes notify members as they approach the scheme’s normal pension age. These notifications help to prompt older workers to consider their options for retirement or working on. Be open to discussions with your older workers to help them consider their options to carry on working or take flexible or full retirement.

Older workers will need to consider their options for working on in conjunction with planning for their retirement and the implications for their pensions. You can refer your employees to the working on and retirement planning guidance on the Directgov website- Opens in a new window.

From 2012, employers will be required to automatically enrol all eligible job holders into a qualifying workplace pension and to make contributions into it. See our guide on workplace pension reforms.

Flexible working for older workers

Flexible working is a popular option for older workers as it allows people to make a gradual transition between full-time work and retirement. Research shows that 60 per cent of over 50s would like to continue working past State Pension age, but on a part-time basis. Half of people who recently retired would have considered working longer if they could have accessed flexible work.

Flexible working has benefits for employers and employees. It can increase employee commitment and motivation and help retain skilled and experienced staff. It can also help employers to manage the flow of work, whether on a day to day basis, or longer term.

It is good practice to offer flexible working to all employees. Remember if flexible working is not open to all, then targeting it at older workers would need to be objectively justified. It may be difficult to justify offering flexible working arrangements to older workers, but not to other groups, such as parents of young children.

For your business to operate flexible working, you should:

  • Review all working options and offer a range of working patterns that meet the needs of the job and the business. Traditional working practices may no longer be the best fit for your business.
  • Try to offer opportunities for flexible or part-time working to all your workers. Circulate information about possible options and how to apply to work flexibly. Offering flexible working opportunities to just certain age groups would need to be objectively justified.
  • Ensure your managers have details of the options available to employees, how to consider flexible working requests and the importance of not discriminating.
  • Use informal and formal performance discussions to talk about flexible working options and offer a range of working patterns that suit both the business and the employee.
  • Help employees assess the financial implications of flexible working by referring them to information.
  • Look at good practice in your sector for ideas. Download ‘Good practice case studies: Managing without a fixed retirement age’ [opens in a new window]

Redundancy and older workers

In the unfortunate event that employers need to make redundancies, it makes sense to try and keep the staff who have the skills and experience that are essential to the running of the business, whatever their age.

Employers considering redundancies should ensure that all staff involved in the selection and decision-making process are aware that it is unlawful to make a decision based on age unless this can be objectively justified.

See the page: redundancy selection – non compulsory in our guide on redundancy: the options.

Voluntary redundancy

If voluntary redundancy is considered an option, focus on the areas of the business that need scaling back, or on the workforce as a whole. Avoid making assumptions about people which lead to workers of particular age groups being targeted.

Voluntary early retirement may be an option for certain age groups, if permitted by an occupational pension scheme that your business offers. This should be one option within a wider voluntary redundancy offer that is age neutral.

See the page on voluntary redundancy in our guide on redundancy: the options.

To manage redundancy, you should:

  • discuss and agree the criteria to be used to make redundancy decisions and clearly communicate this policy to all staff
  • ensure line managers understand how this will help to retain valuable skills for your business when redundancy decisions are required
  • use performance appraisals to identify the skills and experience of all staff regardless of their age
  • base redundancy decisions on objective criteria and evidence
  • consider developing an equality policy and conducting an equality impact assessment to ensure staff understand that redundancy decisions are made on their skills, experience and business need and not based on age

Find guidance on avoiding unlawful discrimination when making redundancy decisions on the Equality and Human Rights Commission website- Opens in a new window.

Health and safety and older workers

Age is not generally an indication of capability and does not determine an employee’s physical or mental ability to do a job. This guide will help you to look at your health and safety policy and check that any practices or routines you operate are age neutral.

Research shows:

  • In most jobs these days, productivity does not usually decline at least up to age 70, where older workers receive the same levels of training as younger workers.
  • In many cases, any decline in older worker speed can be offset by better judgement based on experience.
  • Poor workplace design and inflexible working practices are more likely than age to prevent staff from being fully effective. Physical demands from work can often be minimised through changes in work design or use of equipment.
  • Older workers tend to have fewer accidents and lower levels of short-term sickness.
  • The general health of older adults is improving and healthy life expectancy is increasing – on average men aged 65 can now expect to live a further 12.8 years in good or fairly good health and women a further 14.5 years.
  • The minority of older workers who do develop long-term sickness tend to opt to leave the labour market altogether.

Ensure you use your regular formal or informal discussions to engage with employees openly about any health and safety issues they may have.

For more information see our section on managing health and safety.

Read some facts and tips to help make your policies age-neutral on the Health and Safety Executive website- Opens in a new window.

Risk assessment

A health and safety risk assessment is an important step in protecting your workers and your business, as well as complying with the law.

To manage potential risks, simple measures can include:

  • assessing whether heavy lifting is necessary for a particular job
  • adapting workstation layout to minimise repetitive movement
  • adjusting lighting and temperature

Changes like this will benefit all employees, not just older workers.

See our guide on managing the risks in your business.

Where an employee develops a disability as defined by the Equality Act 2010, an employer may need to make reasonable adjustments to enable them to continue to do the job. Reasonable adjustments to hours, job type, or equipment could help you to retain valuable skills and experience for your business.

See the page on when an employee becomes disabled in our guide on recruiting and employing disabled people.

Age Positive – main guidance and resources

The law on age and retirement is changing. The Government is phasing out the default retirement age (DRA) from April 2011:

  • from 6 April 2011, employers will no longer be able to issue notifications of retirement using the DRA procedure
  • beyond the transitional arrangements, employers will not be able to compulsorily retire their employees, unless the retirement can be objectively justified in their particular circumstances

For further details and guidance, see the page in this guide on age legislation and the default retirement age.

Age Positive provides guidance and case studies for employers and business leaders setting out the business benefits of recruiting, retaining and training older workers, effective age management practices and the removal of fixed retirement ages.

Age Positive guidance

Employer case studies

Key research on age and employment

The following research reports provide a summary of facts on older worker productivity, health and training capability, demonstrating the positive contribution older workers can bring to the workplace. They identify the extent to which employer practices on age can restrict older worker employment, particularly through the lack of flexible or part-time work opportunities, and flexible retirement.

Statistical Information

Download ‘Older Workers: Statistical Information Booklet, Quarter Two, 2010’ [opens in a new window].

This booklet presents employment statistics on people aged 50 and over in the UK.

Other Sources of Information

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Every effort has been made by the author(s) to ensure this article’s accuracy but it does not constitute legal advice tailored to your circumstances. If you act on it, you acknowledge that you do so at your own risk. We cannot assume responsibility and do not accept liability for any damage or loss which may arise as a result of your reliance upon it.

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