MANAGING WITHOUT THE DEFAULT RETIREMENT AGE A PANEL DISCUSSION James Davies, Sarah McIntyre, Hannah...

MANAGING WITHOUT THE DEFAULT RETIREMENT AGE

A PANEL DISCUSSION

James Davies, Sarah McIntyre, Hannah Price & Georgina Jones

15 June 2011

The Current Retirement Landscape (1)

• The Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 came into force on 6 April 2011

• These Regulations Remove the exceptions in the Equality Act 2010 which

provide that it is not age discrimination to dismiss someone aged 65 and over if the reason is retirement

Remove “retirement” as a fair reason for dismissal in the Employment Rights Act 1996

The Current Retirement Landscape (2)

• The retirement procedure (and the duty to consider requests to stay on) have been deleted from the legislation.

• It is therefore age discrimination to dismiss someone at age 65 or over, unless this can be objectively justified

What are the options for employers?

Remove retirement age

Dismissal of those aged over 65 for one of 5 fair reasons

Maintain retirement age at 65 or higher

Will have to justify compulsory retirement age

Demographics

Default Retirement AgeLewis Silkin – June 2011

Sarah McIntyreEmployee Relations Manager

9.3 billion annual turnover

640 million annual profit

76,000 employees in 41 territories worldwide

21 million customers visit our UK stores each week

Founding member of the Employers Forum for Age

Sit on the Employer’s Forum for Age Steering Group

Have won awards and commendations for our age diversity

Younger worker focus as well – 1st high street retailer to remove the U18 pay rate

Oldest employee 83 years old

Longest service 49 years

Marks and Spencer - Overview

12

Motivation:– Feedback from stores that they were losing good people

– Feedback from individuals that they didn’t want to leave M&S

– Embrace a workforce that reflects our customer base

– Organisational fit

– Drove positive external image

Considerations and Challenges:– Strong policies and processes

– Preparation key

– Legal considerations

– Training for line managers

– Future risk?

Abolishing the DRA

Introduced following A-Day – Changes to Pension reform (06/04/06)

Organisational fit

Popular with employees

Business benefits

Since 2006 number of employees aged 65+ more than doubled from 804 – 1656

2009/10 - 85% of employees who ‘retired’ did so flexibly

Flexible Retirement

Older employees at M&S... Employee Loyalty:

– 11% 20 years plus

– 5% 25 years plus

Your Say Survey Results 2011:

– Over 65’s 82% happy with the training they receive VS Company average of 76%

– Employees with 25 years service 100% satisfied

– Over 55’s 85% positive they’d still be working for M&S in 12 months time VS Company average of 77%

– Over 65’s 96% positive they’d recommend our products VS Company average of 93%

– Over 65’s 76% positive they’d recommend M&S as a place to work VS Company average of 70%

Workplace Discussions (1)


“Whatever the age of an employee, discussing their future aims and aspirations can help you identify their training and development needs and provide an opportunity for you to discuss your future work requirements and how these impact on the employee ... They are a good way of raising the issue of retirement with older employees.”

ACAS – Working without the default retirement age


ACAS – suggested structure:

• Performance to date against targets, activites and outcomes

• Development or training needs

• Future plans (employer)

• Aims and aspirations (employee)

• Future performance


• Cannot hold employees to what is said as part of the discussion

• Flexible working opportunities in the lead up to retirement?

• Legal consequences Discrimination claimsInferences

www.sackers.com© Sacker & Partners LLP 2011

Lewis SilkinManaging without the default retirement age

15 June 2011

Georgina Jones

© Sacker & Partners LLP 2011

Managing without the DRA

PensionsIssues

Normalretirementage (NRA)

What benefits to offer post

NRA?

Flexible retirement

Retirementprocesses


DRA – Normal retirement age (NRA)

NRA?

Looks like this can

be retained

But need to offer benefits if people carry on working


Should NRA be changed?

NRA

Will not change

automatically

Increases will require

consultation (60 days)

Different for different types of workers?

Cannot change for

past service without consent


Benefits after NRA (1)

Continue DB for DB members

Continue DC for DC members

Other options? If potentially discriminatory, can you objectively justify?

Beware of agediscrimination! Starting point,future benefitssame as past


Benefits after NRA (2)

Member choice?Members could

opt out anddefer benefits

Member choice?Members whoopt out could

re-join thescheme on termsoffered to current

new members


Flexible Retirement – from what age?

Objective justification?e.g. if way of

retaining experience,or managing

transition in partsof the workforce?

Potential age discrimination issues.

Should be offeredto all at minimumpension age (55)

unless can objectivelyjustify a different age


Flexible retirement – what would you offer?

Take pension (all or part?) and continue working

Option to re-join for future? (could just be DC)

Risk benefits? (Treat as active or pensioner member? Make choices clear)

Benefits


Group insurance benefits

Very specific

Covers benefits provided by employers to employees

Only applies to insured benefits (not self insured)

Exemption


Pension schemes left out in the cold?


Pensions – new focus for workforce management?

Performance management

Sumner Redstone - 88

Working past 65

Lord Philips - 73

Warren Buffett - 80

Prince Philip - 90

Stephen Hawking - 69

Kenneth Clarke - 70

Tom Jones - 71

The Queen - 85

Helen Mirren - 65

Alex Ferguson - 69

How will employees respond?

Retire anyway?Work a bit later and then retire?Work until feel should stop?Work until chat with employer?Aim for pay off?Work beyond and wait to be sacked?

Implications for employers

Be able to planAvoid pay offs Be able to deal with underperformanceHelp employees who want to retireAdjustments for disability

What employers should do

Obtain informationConsistent, honest and prompt performance

managementConsistent approaches to training and developmentAdequate pensionsFlexible working programmesManager trainingAvoid inferences

Insured Benefits

NEW EXCEPTION

It is not age discrimination to only provide access to “insurance or a related financial service” to employees, aged under 65 (or state pension age if greater).

Insured Benefits

• Does not cover self-insured benefits

• What about those over 65 who already get these benefits?

• Will it deter employees from providing benefits to over 65s?

• If you do provide benefits to the over 65s, will you be able to justify stopping the benefits later on?

Enhanced redundancy schemes

• Will reducing redundancy payments close to retirement still be lawful? cases on windfall payments

> Kraft Foods v Hastie> Ormerod v Cummins Engine Company Limited> Loxley v BAE Systems Land Systems (Munitions &

Ordnance Ltd.)

Share schemes

• Approved & qualifying schemes – minimal impact

• Unapproved & EMI schemes

• Consider “good leaver” provisions

• Defining “retirement”:Age?Length of service?Future plans?

Thank you

MANAGING WITHOUT THE DEFAULT RETIREMENT AGE A PANEL DISCUSSION James Davies, Sarah McIntyre, Hannah...

Documents

Transcript of MANAGING WITHOUT THE DEFAULT RETIREMENT AGE A PANEL DISCUSSION James Davies, Sarah McIntyre, Hannah...