Young workers facing more barriers with less opportunity with abolition of retirement age

23rd September 2011

The default retirement age (DRA) is in the process of being phased out and this started in the UK on April 5, 2011. The DRA was 65 and followed that any employer could give notice to any employee approaching the DRA that their job would be terminated at age 65. Now employers will have to prove the termination at age 65 will support a legitimate business goal. Employers argue this will impact the young workers they can hire.

A recent survey of employers found they believed that the elimination of the DRA will have adverse effects on their businesses. 22 per cent of the employers polled felt the closure of the DRA would impair their ability to hire younger workers when older workers requested to keep their jobs beyond age 65. The Office for National Statistics released the labour market data for the calendar quarter ending 30 June, 2011. Youth unemployment increased by 78,000 to a total of 973,000.

10 per cent of the employers reported they would evaluate a retirement deal which included cash compensation to encourage older workers to accept voluntary retirement at age 65. 11 per cent of the employers were considering getting legal advice on how to handle retirement issues in a post-DRA regulatory setting. Employment law experts warn employers to train their line managers on the new laws to protect their companies from age discrimination suits.

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