February 28, 2013 4:34 am

Companies continue fixed retirement age

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A fifth of employers still have a fixed retirement age despite the coalition’s abolition of default retirement at the age of 65, putting them at risk of being sued for age discrimination, research has found.

While 60 per cent of employers expect the average age of their workforce to increase, the study found that companies were paying little attention to older workers’ needs and not developing their skills.

Overall, the workplace is a tough place after five years of economic stagnation despite a recent upturn in hiring, according to the survey of more than 300 human resources managers by Speechly Bircham, a law firm, and King’s College London.

It found that staff were under pressure to work harder and longer for no additional reward. Stress levels were rising, as were grievances over issues such as poor relations with line managers and bullying or harassment.

More than a third of companies were suffering from skills shortages in important areas. Retraining older staff could be part of the answer, but only one in five organisations were improving training and development for that age group.

The coalition abolished the default retirement age, which had allowed employers to retire staff automatically at 65, 18 months ago. But employers can still set their own retirement age if they can justify it on specific grounds, creating legal uncertainty.

Last year, Leslie Seldon, a solicitor, lost an appeal to the Supreme Court against enforced departure from his firm on his 65th birthday as stipulated in the partnership agreement.

The ruling confirmed in principle that companies could set their own retirement age, but lawyers said there were specific factors involved. To be sure whether their policy was legitimate, employers would have to go through a costly legal process.

Robert Thomas, employment partner at Speechly Bircham, said older employees working beyond the “normal” retirement age were a potential solution to skills shortages, so it was disappointing that businesses continued to overlook them.

“Despite the increasing pool of older workers, there is a staggering lack of investment in their training and development. We were also surprised to find that so many employers still have a normal retirement age, yet the majority cannot justify it,” he said.

That represented not only a liability in terms of discrimination claims, but also seemed “to be a fundamentally poor business decision: a failing to utilise an available pool of talent and retain key knowledge”, Mr Thomas said.

Stuart Woollard, director of King’s management learning board, said while some findings echoed cautious optimism that economic recovery might be in sight, the survey highlighted a “deeply unsettling work environment with organisations, made up of lean workforces, pushing their employees even harder”.

The survey found that 45 per cent of companies expect to increase their workforce this year, outstripping the number that expect a decrease.

A separate survey of 600 employers by the Recruitment and Employment Confederation found that the jobs market was likely to continue to grow this year, with more than half planning to hire more permanent staff in the next three months.

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