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Changes to the statutory default retirement age (DRA) and the latest changes in figures relating to compensation. Relevant to many businesses, we discusses what these changes are and how these changes may affect you.
Default Retirement Age
The default retirement age (DRA) is being phased out over a transitional period running until 30 September 2011. Regulations will come into force on 6 April 2011 and the last day employees can be compulsorily retired using the DRA is 30 September 2011, so the last day to provide six months’ notice required by the DRA provisions is therefore 30 March 2011.
We would therefore recommend that you consider now whether you wish to retire any employees coming up to the age of 65 (before 30th September) or the retirement of any employees over the age of 65. After 30th March you will no longer be able to issue any new notices of compulsory retirement.
Ending Employment after the DRA
Once the DRA has been removed employers will only be able to compulsory retire employees if they can objectively justify a retirement age. This will not be easy and will only be able to be used in exceptional circumstances.
We are anticipating that case law will develop in this area, but for most job roles where there are no specific requirements (e.g. relating to physical fitness or exceptional mental fitness) it will not be possible to use objective justification.
So what other options are available to employers?
Quite simply the only other way to end employment will be by following a performance management procedure, and failure to do so will leave employers open to claims for unfair dismissal.
Therefore it has never been more important to have in place clear performance management procedures supported by job descriptions and performance indicators so that performance management can be clear, fair and (relatively) straight forward.
Changes to Contracts and Policy Documents
If you have a retirement age policy detailed in your contract of employment this should be removed by the end of March. In addition if you have a retirement procedure set out in your employee handbook or similar, this will no longer be relevant after March and should be removed.
(Documents for clients with Your HR Services will automatically be updated and employees advised of the changes by 31st March 2011.
Other retained clients (without Your HR Services) will receive further guidance).
New Rates For Redundancy
The new compensation rates came into force on 1st February 2011.
The area we wish to remind you of is the ‘amount of a weeks pay’ for redundancy purposes.
The maximum weeks pay for (statutory) redundancy for any redundancies actioned on or after 1st February increased from £380.00 to £400.00.
If you may have to make redundancies, please bear these new rates in mind.
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Paula Fisher, Managing Director, is a Human Resources (HR) professional who has worked in HR for over 25 years.
She has held senior HR management positions within corporate organisations and in 1997 completed a Law Degree, graduating with a 1st class honours. She went on to achieve a Master Degree (LL.M) in Employment Law and Employee Relations and has taught employment law at Anglia Ruskin University on the CIPD course (Certified Institute of Personnel & Development).Paula is now the Managing Director (and Founder) of Practical HR Ltd, an HR Consultancy that provides support to SME’s throughout Essex.
Practical HR was formed to provide employment law and human resources support services to organisations to help them meet legal requirements, protect the business and promote positive employee relations (to the benefit of both the organisation and employees).
The services available from Practical HR therefore span many HR disciplines including performance management, training, administration, flexible benefit schemes, etc.
Practical HR aims to put organisations ‘back in control’ when it comes to dealing with any employment issue. And the majority of support therefore concentrates on the employment law aspects of HR including; legal compliance (e.g. contract of employment, policies and procedures); managing performance and conduct issues; managing grievances; restructuring and redundancies.
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