Following the Labour Party’s landslide victory in the UK general election, the party has decided to raise the retirement age for members of the House of Lords to 80. The party hopes to create a “more representative” body, which will eventually see the remaining hereditary peerages also phased out.
The proposals have sparked a wider debate about retirement ages in the UK, with some critics saying Cambridge’s “Employer Just Retirement Age” (EJRA), which currently sets the retirement age for senior researchers at 67, is age discriminatory.
But others argue that the system will open up important avenues for younger talent in academia, while ensuring important new voices are heard alongside older, more experienced staff.
But are forced redundancies legal? Will Labour’s plans encourage more companies to introduce similar rules? And what are the pros and cons for employees and employers?
“Keir Starmer’s announcement that Lords members will be forced to retire when they reach 80 is likely to cause confusion for UK employers who assumed it was illegal to set a retirement age in the workplace,” said Andrew Willis, deputy director of legal at human resources and employment law firm Kroner.
Read more: What is time optimism and why are more and more people falling prey to it in the workplace?
“In reality, it’s not necessarily illegal to have a maximum age for employment, so employers can implement mandatory retirement policies,” he explains, “but they must first pass a difficult legal test, because terminating employment solely on the basis of age violates age discrimination laws.”
So to introduce a mandatory retirement age, companies need a strong reason to vacate positions currently filled by older workers, and they need to be sure that there is no non-discriminatory alternative to terminating employment, otherwise they risk legal problems.
The story continues
“Another thing to remember is that any age limit is legal as long as you meet the conditions and it doesn’t have to be over state pension age,” Willis added.
The benefits of retirement
One of the main arguments in favour of a mandatory retirement system is that it might allow younger workers to advance in their careers.
A recent survey found that more than three-quarters of young workers want their employers to invest more in learning and development to help them grow.
“In certain workplaces, mandatory retirement may create opportunities for career progression and so in that sense it may be helpful for younger workers,” Willis says.
Read more: Why “mouse shaking” is a symptom of bigger work problems
“The main benefit for employers is that it may be easier to provide career paths for employees and enable effective and efficient succession planning. It also helps both employers and employees avoid having to manage older employees on capability grounds on a case-by-case basis.”
Some argue that mandatory retirement plans are economically advantageous for companies, in part because they increase the productivity of younger workers, but there is little data to support this theory, since so few employers actually implement the strategy.
Disadvantages of retirement
Older workers also bring a wealth of experience that younger workers can benefit from, so finding the right balance is important.
Some argue that imposing a retirement age is age discrimination, especially at a time when attitudes towards older workers are deteriorating in some sectors.
“Career progression opportunities are essential to future-proofing the workplace, as is creating a workplace where everyone’s voice is heard and their ideas are valued, regardless of age,” Willis says.
Read more: What is productivity anxiety and why is it affecting more workers?
Career coach Soma Ghosh adds: “There’s no flexibility to leave when you want to and making it compulsory means taking away choice.”
Additionally, some older workers struggle with the requirement to retire at a certain age. Increasingly, people are choosing to continue working after retirement because they are not ready to retire or because they cannot afford not to: Nearly half (46%) of working UK adults plan to continue working after reaching state pension age, according to a survey of 2,000 people by pension provider People’s Partnership.
For companies, implementing mandatory retirement ages can be difficult: “The main difficulty is that on its face it seems discriminatory, although the arguments can be well refuted,” Willis says.
“Employers must be able to show that their mandatory retirement age is intended to serve a legitimate purpose – namely, to serve a real business need.”
Download the Yahoo Finance app, available for Apple and Android.