Report shows changing behaviour of employers in wake of the scrapped default retirement age
According to a report set to be launched on 3rd October, scrapping the Default Retirement Age (DRA) in the UK could lead to a drying up of opportunities for younger workers. Nearly one in four employers (22%) confirmed that, with the phasing out of the DRA set to be complete by 1 Oct, they expect to have less capacity to take on younger members of staff. The findings come as a further blow to the nations’ youngest workers, who are currently facing unemployment levels of over 20%.
The report, from international legal practice Norton Rose LLP, will provide an insight into how the UK’s employers have reacted to the scrapping of the DRA.
Importantly, the report reveals the extent to which the scrapping of the DRA will impact hiring strategies. 46% reported that the change will have a negative impact on their business, with 22% confirming that they will have less capacity to take on younger members of staff. Interestingly, 11% also reported that the change will make it easier for them to retain experienced members of staff.
There remain key areas where employers are failing to react to the scrapping of the DRA. Despite the change, nearly one in five (19%) continue to single out older employees for conversations about retirement, and 76% have not given their line managers any additional training on how to approach the scrapping of the DRA in the context of their own teams.
Of the 125 employers surveyed, a significant minority are actively taking steps to retain some degree of compulsory or encouraged retirement. 11% are taking legal advice on whether they can continue to enforce retirement and 10% are looking to incentivise retirement by offering a financial package.
The report does indicate many employers are adopting more forward thinking practices though. Nearly half are now considering flexible working arrangements for over 65s, whilst 73% have changed the way they talk about retirement with their employees.
Paul Griffin, London head of employment at Norton Rose LLP, commented:
“Scrapping the default retirement age was a bold move although to some extent inevitable. There’s no doubt that workers have a significant amount to offer their employers after the age of 65, but the knock-on impact on employers’ capacity to take on younger talent could be profound. It’s an issue many feared would be sparked by the change – this survey confirms that it’s very much a reality.
“Employers are failing to negate the impact of the change on their ability to provide opportunities to younger workers. Too many are holding firm to rather blunt solutions, such as singling out older employees to talk about retirement, or simply attempting to continue to enforce retirement.
“There’s a real danger for employers here. The fact of the matter is that, after the start of October, the default retirement age in the UK will be no more. If employers want to ensure they stay on the right side of the law when it comes to retirement without harming their ability to take on younger workers, they need to find more thoughtful solutions.
“This isn’t a message that all employers are hearing, though our survey also shows that significant numbers are. Flexible working, performance management, redeploying talent, job sharing – these are all options that many employers are looking at closely. If more employers are going to ensure they have the capacity to bring on younger workers after the default retirement age ends, they need to take their lead from this enlightened majority.”
