Although a final decision has yet to be made, the Advocate General of the European Court of Justice has indicated that in his view employers in the UK should be able to continue enforcing retirement at age 65. In doing so, he has rejected suggestions that this is age discrimination and therefore illegal.

In recessionary times, any legitimate excuse to cut the workforce could appear attractive, so the ability to enforce retirement at age 65 could seem a good thing to some employers. However, older employees can offer a wealth of benefits to their firms, including experience built up over many years (which might have helped some bankers and investment managers, recently) an ingrained work ethic and a way of dealing with people that adds an additional dimension to many businesses.

On the other hand, some people might argue that older workers should make way for the next generation. There are clearly points on both sides and this particular debate will run for some time, as it goes to the European Court and the High Court.

In some respects, the argument may be academic in any case, because employers should, perhaps, increasingly be looking at what is equitable to employees and the business rather than what the law says. Naturally the law should not be breached, but where it is restrictive, there are good arguments in favour of employers being more generous to employees, rather than less.

Getting the best out of the workforce
For example, simply by paying above the national minimum wage, an employer demonstrates to his employees that he is taking an interest in their needs and is likely to engender greater loyalty – and more importantly, commitment – from them. This can translate into improved customer relationships and productivity. When the chips are down and extra effort is required for a special purpose, this can count for a lot.

The same applies to providing additional employment benefits, such as pensions, death in service life insurance, group sickpay schemes and private medical insurance.
Those employers who can afford to ‘go the extra mile’ are likely to attract and retain a superior workforce, compared with those who do the barest minimum to satisfy the law. And in a time of business downturn, having a loyal workforce that recognises just how closely its own interests are allied to those of the business can make a big difference between just managing and thriving.

Indeed, if additional working capital is required in order to help cover a period when customers may be later paying, and suppliers more demanding, a well structured employee benefit package could be one factor that convinces a bank that the business is well managed and worth lending to.

Working beyond 65
There are, of course, likely to be implications for some additional benefits of allowing an employee to work beyond age 65. The pension scheme itself may have a ‘mandatory’ retirement age, although this can frequently be circumvented – and there is no longer a prohibition on an employee drawing an occupational pension at the same time as carrying on exactly the same job as when the pension was being built up. Other issues such as death in service and health insurance may be more difficult, since these are at the discretion of an insurance company underwriter. But such problems need not be insurmountable, given good will on both sides … which is what we have been discussing!

As ever, you should take individual professional advice before making any decision relating to your personal finances. For further information, please contact Robert Bruce Associates.

NOTHING CONTAINED IN THE ARTICLE SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE. PLEASE NOTE THAT THERE MAY BE VARIATIONS FOR THOSE LIVING IN SCOTLAND AND NORTHERN IRELAND.