Ageing Workforce, Productivity and Labour costs of Belgian Firms V ...
QBE Issues Forum - Ageing Workforce - March 2011
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Transcript of QBE Issues Forum - Ageing Workforce - March 2011
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7/28/2019 QBE Issues Forum - Ageing Workforce - March 2011
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The ageing workforceand the abolition of the
Default Retirement Age-Issues-forum--March-2011
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The-ageing-workforce-and-the-abolition-of-the-DRA--Issues-forum-March-2011
Time to embrace thosegrey hairs?
At-the-time-of-writing,-employers-can-still--
use-the-Default-Retirement-Age-(DRA)-to-
retire-workers-when-they-reach-the-age-of-
65.-On-13-January-2011,-the-Government-
conrmed-that-the-DRA-will-be-abolished-
from-1-October-2011.-From-this-date,-no-
employee-can-be-compulsorily-retired-by--
an-employer-when-they-reach-65-unless--
that-retirement-can-be-objectively-justied.-
This-effectively-means-that-the-last-date-
upon-which-retirement-notices-can-be-
issued-using-the-DRA-is-31-March-2011.
The-proposed-changes,-applicable-to--
all-employers-and-all-company-sizes-and-
sectors-will-have-far-reaching-consequences.-
Best-practice-organisations-will-be-planning-
now,-accepting-the-need-to-take-a-fresh--
look-at-the-management-of-issues-which-
previously-may-have-had-little-or-no-legal-risk.-However-those-who-fail-to-make-necessary-
changes-in-good-time-may-face-signicant-
and-costly-consequences.
This-issues-forum-will-discuss-the-
implications-of-the-removal-of-the-DRA,-
including-the-potential-impact-in-the-civil-
claims-arena-and-will-highlight-some-of-the-
practical-issues-that-employers-will-need--
to-consider-in-managing-older-workers--
and-across-the-workforce-more-generally.--
Background to the DRA
The-Employment-Equality-(Age)-Regulations-
2006,-which-came-into-force-on-1-October-
2006,-provide-for-a-DRA-of-65-that-
employers-can-rely-on-if-they-wish.-The-
regulations-make-earlier-retirement-ages-
unlawful-unless-employers-can-objectively-
justify-them.-The-regulations-also-introduced-
a-statutory-right-for-individuals,-within-a-
dened-process-and-notication-period,-to-
request-postponement-of-retirement-beyond-
the-age-of-65.-The-employer-has-a-
reciprocal-duty-to-fairly-consider-such-
requests.-
The ageing workforceand the abolition of the
Default Retirement Age
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Abolition of the DRA
With-the-abolition-of-the-DRA-on-the--
1-October-2011-the-following-changes--
will-take-effect:
- The-last-day-on-which-employees--
can-be-compulsorily-dismissed--
on-the-grounds-of-retirement-is--
30-September-2011;-- The-last-day-to-provide-the-requisite--
six-months-notice-of-dismissal-under-
the-DRA-procedure-is-therefore--
30-March-2011;-
- Employers-can-still-rely-on-the-DRA-
provisions-after-30-March-2011-and-
before-6-April-2011-but-only-if-they-use-
the-short-notice-provisions,-which-entitle-
an-employee-to-claim-compensation-
(subject-to-a-maximum-of-eight-weeks-
wages)-in-the-event-of-dismissal;-
- Employers-will-not-be-able-to-issue--
any-new-notications-of-compulsory-
retirement-using-the-DRA-on-or-after--
6-April-2011;-
- If-the-date-of-retirement-falls-after--
1-October-2011-the-DRA-will-not--
apply-and-the-employer-will-need-to-
objectively-justify-retirement.-If-they-
cannot-they-will-risk-facing-unfair-
dismissal-and-age-discrimination--
claims-for-forcing-workers-to-retire.
Why abolish the DRA now?
The-Governments-reasoning-is-the-
economic-and-other-benets-of-extending-
working-lives-including-the-reduced-burden-
on-pension-funds,-increased-income-tax-
revenues-and-reduced-welfare-payments.-
It-will-also-help-to-counter-the-demographic-
challenges-posed-by-a-dwindling-working-
population-and-an-increasing-retired-population.-
In-1911-there-were-10-individuals-of-
working-age-for-every-pensioner,-today--
there-are-about-4;-and-in-2055-there-will--
be-2.-One-in-four-babies-born-today-is-
expected-to-live-to-100.-
(Lord-McKenzie-of-Luton,-DWP--
Undersecretary,-July-2008).--
There-is-wider-acceptance-of-the-benets-
older-people-can-bring-by-remaining-in--
the-workforce-and-evidence-showing-an-
increase-in-employees-wanting-to-work-
past-the-DRA-of-65.-This-is-due-in-part--
to-economic-necessity-as-increased-life-
expectancy-has-resulted-in-lower-pensions-
(HSE-Horizon-Scanning-Intelligence-Group-
Demographic-study--Report,-2206).-There-
is-also-anecdotal-evidence-to-support-the-
argument-that-enforced-retirement-has--
a-detrimental-impact-upon-the-mental,-
physical-and-social-wellbeing-of-older-
people.-Improved-health-and-physical-capacity-in-later-life-means-employees--
now-have-the-desire-to-do-more.-
In-a-study-by-the-Chartered-Institute-of-
Personnel-Development-2007-11%-of-the-
workforce-was-already-working-past-the-
DRA.-In-a-survey-of-1000-workers-38%-
planned-to-work-beyond-the-DRA.-If-exible-
working-was-available-the-percentage-
intending-to-work-beyond-the-DRA-
increased-to-57%.
(HSE-Horizon-Scanning-Intelligence-Group-
Demographic-study--Report,-2206).
However-others-have-taken-a-more--
negative-view,-suggesting-that-scrapping--the-DRA-will-leave-a-vacuum,-raising-a-large-
number-of-complex-legal,-employment-and-
practical-questions-which-employers-will-
have-to-overcome.
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Contractual retirement ages
1.- Two-thirds-of-businesses-already-
operate-without-a-xed-retirement-age.-
This-gives-employers-an-opportunity-to-
retain-skilled-and-experienced-staff,-and-
opens-up-ongoing-and-future-work-
options-for-older-workers.-Increasingly,--
it-will-be-for-employees-to-consider-
when-and-how-they-retire.
2.- Following-abolition-of-the-DRA-an-
employer-will-still-be-able-to-operate-
their-own-compulsory-retirement-age-
provided-they-can-objectively-justify-it--
as-a-proportionate-means-of-achieving-
one-or-more-legitimate-aims.
3.- Research-indicates-that-performance--
in-most-jobs-is-unaffected-by-age-until-
at-least-70-years.-Unless-there-is-a-
specic-health-and-safety-related-reason-
that-is-job-specic,-it-may-be-difcult--
for-employers-to-justify-imposing-a--
xed-retirement-age-below-70-years.-
4.- Even-with-a-contractual-retirement--
age-employers-will-still-need-to-consider-
the-fairness-and-evenhandedness--
of-dismissal,-including-the-procedure-
thats-adopted-and-will-still-need-to-
seriously-consider-an-employees-
request-to-continue-working.
Redundancy and olderworkers
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-justied.-
This-follows-the-logical-argument-that-
employers-should-try-and-keep-the-staff--
with-the-skills,-experience-and-performance-essential-to-the-running-of-the-business,-
whatever-their-age.-However-there-will--
also-be-arguments-that-it-prevents-talent--
and-ideas-from-new-recruits-entering-and-
positively-inuencing-the-organisation.
If-voluntary-redundancy-is-considered-an-
option-organisations-will-need-to-focus-on-
the-areas-of-the-business-that-need-scaling-
back-or-on-the-workforce-as-a-whole-and-
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.-This-should-
be-one-option-within-a-wider-voluntary-
redundancy-offer-that-is-age-neutral.
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Capability dismissals
In-the-absence-of-a-contractual-retirement-
age-employers-will-have-to-identify-and-
justify-fair-reasons-for-dismissing-an-
employee.-This-raises-a-number-of-
potentially-complex-issues-particularly-
around-how-employers-manage-their-
appraisal-and-employee-review-processes-
i.e.-they-are-likely-to-come-under-increasing-scrutiny.
- There-will-need-to-be-clarity--
and-consistency-around-what-
underperformance-actually-means--
and-how-it-can/should-be-measured,-
recorded-and-managed-as-part-of-the-
appraisal-process-for-all-employees-
- Employers-will-still-be-required-to-
provide-coaching-and-assistance-
together-with-clearly-dened-and-
measurable-goals-to-help-the-employee-improve-their-performance--allowing-
sufcient-time-to-determine-whether--
the-employee-has-achieved-the-
required/desired-improvement.--
Flexible working
Flexible-working-is-a-popular-option-for--
older-workers-as-it-allows-people-to-make--
a-gradual-transition-between-fulltime-work-
and-retirement.-However,-if-exible-working-
is-not-open-to-all,-then-targeting-it-at-older-
workers-would-need-to-be-objectively-
justied.-It-may-be-difcult-to-justify-offering-
exible-working-arrangements-to-older-
workers,-but-not-to-other-groups,-such-as-
parents-of-young-children.-Organisations-
should-take-the-opportunity-to-review--
all-working-options-and-offer-a-range-of-
working-patterns-that-meet-the-needs--
of-the-job-and-the-business-to-all-workers.--
Civil claims impacts
The-civil-claims-arena-will-not-be-unscathed-
by-these-changes-as-the-demographics-in-
the-working-population-gradually-change.-
Whilst-impacts-on-accident-claim-frequency-
are-less-certain-there-is-an-anticipated-rise--
in-disease-claims-and-conditions-generally-
more-prevalent-in-older-workers.-It-is-likely-
that-reserves,-particularly-for-larger-value-claims,-will-increase.-For-example:
- For-large-claims-where-individuals-can-
no-longer-return-to-work-following-an-
accident-or-as-a-result-of-disease-or--
illhealth-due-to-work,-future-wage--
(and-other)-losses-will-be-claimed-
beyond-the-current-DRA---
- There-is-potential-for-a-double-whammy-
effect-with-the-anticipated-reduction-in-
the-discount-rate-(yields-generated-by-
indexlinked-government-stock)-for-future-loss-settlements.-The-rate-is-currently--
at-2.5%-but-is-likely-to-be-reduced-to-
between-1.5%-and-2%-which-will-have-
signicant-impact-on-high-value-claims.-
At-the-time-of-writing-and-to-further-
compound-this-issue,-claimant-rms--
are-already-recommending-that-large-
settlements-be-delayed-until-the-Lord-
Chancellor-completes-his-review,-thus-
further-adding-to-legal-costs
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- Other-claims-costs-such-as-recoverable-
benets-and-NHS-charges-are-also-
likely-to-increase-as-recovery-rates-for-
older-people-are-longer-and-the-length-
of-hospital-stays-are-increased-(BUPA-
report-Healthy-work,-Challenges-and-
Opportunities-to-2030)
- Degenerative-conditions-such-as-
disease,-cancers-and-arthritis-are--
more-prevalent-with-age-and-there--
will-be-an-anticipated-increase-in-claims-
for-such-conditions.-Consequently-there-
will-be-an-increased-focus-on-medical-
causation-issues,-i.e.-whether-conditions-
are-work-related,-or-are-accelerated-or-
aggravated-by-work
- At-rst-blush-the-QBE-data-below-(see-
Fig-1)-might-suggest-that-older-workers--
have-an-increasing-propensity-to-claim,-
perhaps-partly-due-to-psychological-/-
generational-factors.-However-this-data-
is-two-dimensional-and-it-may-simply-
reect-the-true-changes-in-the-age-
demographic-of-QBE-clients-employees-
over-this-period.-Ultimately,-you-as-
employer-should-have-the-means-to-assess-and-analyse-whether-the-age,-
accident-and-claims-prole-of-your-
workforce-needs-further-consideration.
- Loss-of-pension-claims-are-likely--
to-increase-and-will-become-more-
complex,-as-well-as-potential-claims--
for-the-loss-of-employer-contributions
- On-a-positive-note-however,-age-is-
unlikely-to-affect-the-general-damages-
component-of-claims-and-the-care-and-
assistance-components-of-large-claim-
settlements-may-actually-reduce.-
Fig 1: % of Accident Claims by Ageof Claimant at Date of Accident
35.0%
30.0%
25.0%
20.0%
15.0%10.0%
5.0%
0.0%
2000
A: 18 to 30
D: 51 to 60
B: 31 to 40 C: 41 to 50
D: 61 to 70
2001 2002 2003 2004 2005 2006 2007 2008 2009
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The realities of ageing
The-ageing-process-affects-the-body-and-
mind-in-a-number-of-ways.-Whilst-it-would-
be-unfair-and-unwise-to-consider-older-
workers-as-a-homogenous-group,-statistics-
(rather-obviously)-show-that-the-death-rate-
naturally-increases-with-age;-muscle-power-
and-lung-function-starts-to-decrease-from-
middle-age-and-eyesight,-hearing-and-joints-degenerate.-Various-mental-changes-can-
also-occur-in-older-workers-notwithstanding-
a-varying-approach-to-problem-solving-from-
their-younger-counterparts-i.e.-a-tendency--
to-use-experience-as-opposed-to-working--
a-solution-from-rst-principles.
In-the-civil-claims-arena-musculo-skeletal-
disorders-(MSD)-represent-a-signicant-
cohort-of-personal-injury-claims.-Self--
reported-MSD-caused-or-made-worse-by-
work-increase-for-older-workers-and-the-
Guidance-to-the-Manual-Handling-
Operations-Regulations-1992-recognises-
that-back-pain-and-MSD-increase-with-
age-
An-individuals-physical-capacity-varies-with-
age,-typically-climbing-until-the-early-20s,-
declining-gradually-during-the-40s-and-more-
markedly-thereafter.-It-should-be-recognised-
that-the-risk-of-manual-handling-injury-may-
be-somewhat-higher-for-employees-in-their-
teens-or-in-their-50s-or-60s.-
However-it-is-also-probably-true-that-
psychosocial-factors-may-be-as-important--
in-predicting-sickness-absence-from-back-
pain-and-it-is-interesting-that-the-estimated-
prevalence-of-self-reported-stress,-
depression-or-anxiety-caused-or-made-
worse-by-work-is-less-prevalent-for-older-
employees-(55+).
With-an-ageing-workforce-there-is-likely-to--
be-more-illhealth,-more-frequent-and-longer-
levels-of-absence-(BUPA-report-Healthy-
work,-Challenges-and-Opportunities-to-
2030).-Whilst-older-workers-are-not-
necessarily-more-prone-to-workrelated-
accidents,-when-they-do-suffer-an-injury--
it-is-more-likely-to-be-severe-and-require-a-
longer-recuperation-time,-particularly-when-
harbouring-preexisting-and/or-degenerative-
conditions.-
However,-and-generally-speaking,-age-is--
not-an-indication-of-capability-and-does--
not-in-itself-determine-an-employees-
physical-or-mental-ability-to-do-a-job.-
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A pro-active strategy?
Health-and-Safety-and-Occupational-Health-
services-in-conjunction-with-their-Human-
Resource-colleagues-should-be-gearing-
themselves-up-to-develop-strategies-for-the-
employment-of-an-older-working-population.-
For-example:
- Risk-assessments-will-need-to-factor--in-age-related-changes-such-as-MSDs,-
eyesight,-hearing-and-reaction-times.--
Safety-professionals-should-advocate-
common-sense-steps-to-compensate-
for-decrements-in-performance-in--
these-areas
- Poor-workplace-design-and-inexible-
working-practices-are-more-likely-than-
age-to-prevent-staff-from-being-fully-
effective-and-the-physical-demands-
from-work-can-often-be-minimised-by-
making-changes-following-proactive-consultation-
- Individual-(or-more-personalised)-risk-
and-capability-assessments-are-likely--
to-feature-more-prominently-in-the-work-
place.-These-tools-will-be-invaluable-not-
only-to-monitor-performance-but-also--
to-proactively-address-areas-within-
businesses-that-require-consideration-
such-as-training.-Older-workers-may-
have-different-learning-styles-which-
should-be-acknowledged-e.g.-an-
increased-reliance-on-IT/web-based-training-and-support-may-be-less--
suited-to-an-older-audience
- A-signicant-challenge-for-employers--
will-be-the-robust-management-of-
capability-assessments-in-the-context--
of-performance-management-for-all-
employees.-It-will-likely-fall-to-line-
managers-to-continually-monitor-the-
progress-of-employees-performance-
levels-but-it-will-require-a-joined-up-
approach-from-both-HR,-H&S-and-
occupational-health-departments.--
Generally-speaking-best-practice-employers-
will-already-be-dealing-positively-with-the-
above-issues-through-the-risk-assessment-
process-and-facilitating-regular-formal-or-
informal-discussions-with-employees-(old-
and-young),-allowing-them-to-talk-openly-
about-any-health-and-safety-issues-they--
may-have-and-respond-positively-to-any-
issues-or-concerns.
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Conclusion
The-abolishment-of-the-DRA-will-lead-to--
an-increase-in-the-average-age-of-the-UK-
workforce-bringing-a-number-of-challenges-
for-Employers.-Contractual-Retirement-Ages-
(CRAs)-can-still-be-enforced-but-will-need--
to-be-objectively-justied-and-can-still-be-
challenged-by-employees.-The-experience--
of-employers-will-vary-between-industries-as-it-will-be-easier-to-justify-a-CRA-for-physically-
demanding-job-roles-such-as-construction-
as-opposed-to-clerical-roles.
With-change-often-comes-fear,-but-amongst-
some-real-negative-consequences,-there--
will-also-be-some-unjustied-preconceptions-
around-the-realities-of-the-ageing-process-
and-having-an-older-workforce.-There-are-
undoubted-benets-that-employing-older-
workers-will-bring.-Indeed-the-changes--
may-trigger-a-more-holistic-approach-to-
employee-wellbeing-with-occupational--
health-professionals-being-more-involved--
in-the-performance-management-and-
appraisal-process-covering-the-areas-of-
health-and-capability-for-all-employees.--
QBE-recommend-that-employers-start-to-
investigate,-embrace-and-communicate--
the-changes-they-will-need-to-make-now--
in-terms-of-internal-policies,-procedures,-
practices-and-attitudes-in-preparation--
for-when-DRA-is-abolished.
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Author biography
Adam-Shelverton-joined-the-QBE-
Rehabilitation-Team-in-2009.-Since-qualifying-
as-a-physiotherapist-in-2003-he-has-worked-
in-a-variety-of-clinical-settings-including-the-
NHS,-Private-hospitals,-clinics-and-sports-
clubs.-Adams-main-area-of-expertise-lies-
with-musculoskeletal-injury-management,-
with-previous-experience-working-with-the-UKs-leading-Orthopaedic-consultants.-
To-nd-out-more,-about-QBE,-please-visit-
our-website:-www.QBEeurope.com/rm
Disclaimer
This-publication-has-been-produced-by-
QBE-Insurance-(Europe)-Ltd-(QIEL).-
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QBE-Insurance-Group.
Readership-of-this-publication-does-not-create-an-insurerclient,-or-other-business-
or-legal-relationship.-
This-publication-provides-information-
about-the-law-to-help-you-to-understand-
and-manage-risk-within-your-organisation.-
Legal-information-is-not-the-same-as-legal-
advice.-This-publication-does-not-purport-
to-provide-a-denitive-statement-of-the-law-
and-is-not-intended-to-replace,-nor-may-it-
be-relied-upon-as-a-substitute-for,-specic-
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QIEL-has-acted-in-good-faith-to-provide-
an-accurate-publication.-However,-QIEL-
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