EFA Conference – 10th February 2010

Sarah VealeHeadEquality and Employment Rights Department

Financial Concerns

• Exacerbated by economic downturn – employees “remain in work or lose home”

• Bolster pension provision – funds not performing as well as expected.

Financial Concerns

• Impact of “career break” (maternity, paternity, etc)

• Defined Contribution Pension schemes – rate determined by the date of 65th birthday

Insecurity of Employment

• Remaining in work after 65 often means less favourable treatment

• Uncertainty about period of continual employment

Insecurity of Employment

• DRA substitute for good management practice

• Reliance on DRA rather than using established/statutory collective or individual redundancy procedures

Lack of Flexibility

• Employees in some sectors struggling to stay in work

• No desire to remain in low paid, undervalued work

Lack of Flexibility

• DRA drives out talent, lowers staff morale, drives up recruitment costs and compromises customer satisfaction

• Places stress on families

Right to Request

• Weak provision

• Procedure burdensome – no obligation on employer to assess employee capability or give reason for refusal

Right to Request

• Those notified under the procedure often miss out on training and promotion procedures

• Can be useful tool for employers wishing to cut jobs

• Of 2m workers classified as “economically active” the majority are over 50

• Cabinet Office research (2000) indicates 40% men and 20% women left work earlier than they had expected

Recent Trends

Recent Trends

• 2008 CBI employment trends survey suggested one third employees were asking to stay on

• Their 2009 survey reflects a growing desire among employers to adopt more flexible working arrangements

Union Negotiating Achievements Civil Service

• March 2008 new flexible retirement scheme adopted

• Encourages older workers to reduce working week as prelude to retirement

Civil Service

• Reduction in salary income 20% but can access all or part of pension and receive Lump sum accrued to date

• Take up had been significant both for these over and under 65 (several thousand)

Civil Service

• October 2008 Cabinet Secretary announced removal of DRA for CS employees from April 2010 (October 09 for senior civil servants)

Public Sector - NHS

• NHS pension scheme subject of major review

• New scheme open to existing members (who transfer) and all new joiners

Public Sector - NHS

• Scheme provides for “career end” flexibility including

• continue in work and draw down part of pension

• continue to build pension rights (by paying contributions to age 75)

Public Sector – NHS

• Increased pensions for late retirements

• Increased options, ie, reduced hours in lead-up to retirement

Maritime Sector - Officers

• Until recently routine “retirement” dismissal of employees ages 65

• Employers concerned about “setting a precedent” if they granted requests to stay on

Maritime Sector - Officers

• Union intervention in specific cases (on appeal) has been successful – tendency now for employers to strike balance between individual’s capabilities, qualifications and business consideration before applying DRA

• Still some uncertainty around post-65 dismissal procedures

Retail Sector

• Industry attracts older workers – average 18 year old at Tescos stays 6 months; average 60 year old stays 5 years

• Tesco (and USDAW) operate fully flexible retirement policies

Retail Sector

• Leads to fewer leavers – reduced recruitment costs – better staff morale

• Retained skills leads to better customer service and satisfaction – business case

Other Sectors

• Finance with HBOS

• Retail with Co-op

• Local Government with Notts County Council

TUC Position

• DRA hinders employees’ ability to combine work with domestic and other responsibilities

• But improving opportunities for older workers not just about removing DRA (or other contractual RAs)

TUC Position

• No desire to see workers remain in low paid, undervalued jobs and they should not be obliged to do so

• Support replacing DRA with flexible retirement schemes including secure pension arrangements for those below and over 65