The Ageing Workforce Briefing No 53
The government plans to implement the European
Employment Directive, which includes provisions to combat age
discrimination. However the legislation relating to age discrimination
will not come into force until 2006.
This briefing paper therefore examines the issue
of the ageing workforce, including age discrimination, the Rutherford
case and the benefits of an older workforce.
Scotland, in line with the rest of the UK, is
facing the problem of an ageing population whereby the greatest
increase in population growth will occur among those aged 55 or
This will result in a diminishing proportion
of younger, economically active citizens and a growing proportion
of older, retired people in the future. The so-called 'dependency
ratio' is likely to increase. The debate centres most pointedly
around questions of how to finance the spiralling cost of pensions,
health care and social support, especially with fewer people working
and paying taxes.
The maintenance and care of the older generations
will be a more significant issue once the numbers increase rapidly.
This why some have called it a 'timebomb'.
Some commentators fear that this will lead to
a reduction in the GDP and a lowering of the standard of living.
However other commentators are not so pessimistic, believing that
productivity may improve and that encouraging more elderly workers
back into employment may be beneficial to both employers and employees.
It has been estimated that only 63.4% of older
workers in Scotland (those aged between 50 and retirement age)
are either in employment or are actively seeking it. Age Concern
has raised the issue that too many older workers have been out
of the workforce for years before they retire. This may in part
be due to age discrimination.
For those out of work there is the problem of
finding suitable training opportunities to make them attractive
to employers as well as a general concern over age discrimination
during recruitment. For those in employment access to training
and development opportunities may be restricted, as some employers
believe that they will not get sufficient 'payback' from older
workers before they retire.
Another concern for those in employment is that
of older workers being the first ones in line for redundancy and
dismissal if an organisation is looking to lose staff.
Although the Westminster Parliament will not
pass legislation on age discrimination before 2006 there may be
some role for the Scottish Executive to act sooner. This is due
to the Scotland Act 1998, as its definition of equal opportunities
was defined widely enough to include the grounds of age. This
Act places duties on certain office-holders and public authorities
to pay due regard to the equal opportunity requirements.
The Rutherford Case
One concern for older workers was that under
the Employment Rights Act 1996, ex-employees couldn't bring unfair
dismissal claims if they are over the normal retirement age for
their employment position. If there is no normal retirement age
they cannot bring a claim if they are over 65.
The Rutherford case involves a 67-year-old man
who was made redundant. He argued that the bar on older employees
bringing unfair dismissal claims and receiving redundancy payments
was indirectly discriminatory, and therefore invalid.
Eventually he won his case by proving that he
was victim to indirect sex discrimination, in that as far more
men over 65 continue to work than women, then to compel him to
retire at 65 is clearly sex discrimination. The tribunal found
that the age bar amounted to unlawful sex discrimination and was
This has now opened up the issue of more flexible
retirement dates for employees, allowing them to remain at work
past the normal retirement age, if they so wish.
Benefits of an Older Workforce
Many organisations are now starting to realise
the benefit of employing and retaining older workers. As the population
ages there will be fewer workers, so attracting and retaining
older workers will become a necessity for many organisations.
Also, by encouraging more elderly people into
employment this will help offset the problems of an increasing
Recent surveys have revealed that older workers
are more loyal (resulting in a drop in staff turnover), perform
better in appraisals and have sickness levels no worse than younger
One method of retaining older workers is to offer
flexible retirement dates as well as more flexible working hours.
This allows employees nearing retirement to reduce their hours
while the employer still retains their organisational knowledge
With an increasing life expectancy a lengthy
retirement period is often unattractive and, to many people, not
financially viable. However by making it easier for them to retain
their employment, even on a part time basis, this will help workers
prepare for retirement, enhance their pension rights, maintain
self-esteem and contribute to the economy.
One method could be by letting employees receive
part of their company pension while working part time. Currently
this is prohibited by pensions legislation but the government,
in the Pensions Green Paper, are considering allowing this to
happen (See P & I Briefing No. 52).
This will help companies who may otherwise lose
experienced employees to competitors if the employees were wanting
to reduce their hours.
Action for Branches
Unless the Rutherford case is reversed, this
will provide branches with a starting point in negotiations to
retain older workers who do not wish to retire. Branches should:
- Include age discrimination within equality policies, and
- Raise the issue of flexible working and retirement dates.
Age Positive Website
Campaign against age discrimination in Employment
Loretto, W. & White, P.
The beginning of the end of early retirement?
Dave Watson - firstname.lastname@example.org
@ The P&I Team
14 West Campbell St
Tel 0845 355 0845
Fax 0141-307 2572