With the retirement age now 67, HR should be prepared

On July 1, Australia increased its retirement age to 67.

And this change may be more easily accommodated in some industries than in others, according to Andrew Tobin, Principal at Hopgood Gamin Lawyers.

“I have plenty of clients who have a white-collar or a partly white-collar workforce and they have employees working well into their 70s and without problem,” he told HRD Australia. “But in other types of jobs, it's going to be difficult, particularly physical jobs.”

There could also be situations where a person’s capacity is affected by age-based declines – whether physical, mental, or both – and they become unable to perform the inherent requirements of their jobs.

“If they can't do the job anymore – not because of their age per se but because of age-related decline — then that's something that has to be managed,” Tobin said.

While this new retirement age won’t dramatically add to what businesses already have to do, he said, there are still a number of best practice steps for HR leaders when dealing with employees who are approaching retirement age.

Legalities around retirement

In Australia, it is illegal to force someone to quit once they reach the retirement age.

“Except in some very limited situations, there's no compulsory age of retirement and there's no legal expiry date that employers can enforce,” Tobin said. “If someone is presenting who’s willing and able in their late 60s, early 70s, then you have to accommodate them.”

The only reason you could force someone’s exit is if they no longer meet the inherent requirements of their position or if their job becomes redundant, he said.

What employers need to watch out for is ageism – discrimination on the basis of age. With this older retirement age, employees may feel compelled to stay longer on the job, but that could potentially lead to some pushback from employers, Tobin said.

“There might be more unlawful discrimination type claims from people who say they've been adversely treated because of their age.”

Tobin used a hypothetical example of someone who is employed as an air traffic controller, and in this scenario, they have no compulsory retirement age. If that employee loses some degree of mental acuity, an employer may consider that to be a proper basis to terminate their employment or redeploy them to something that's much less risky. However, the employee may consider that to be unlawful and believe they are being terminated because of their age.   

The Fair Work Act makes it unlawful to treat people adversely upon the basis of their age or disability, among other things, he said. This not only imposes potential liability for compensation, it also exposes employers to the potential liability for a civil penalty or a fine.

How HR teams can prepare for those heading to retirement

It’s important for HR teams to know the demographics their workforce and plan for departures, Tobin said. This also means having good working relationships with employees so that you can plan more effectively.

“Everyone should be treated with respect and dignity, but older people shouldn't be made to feel that they've passed their use-by date,” he said. “And if you have their trust, then that opens the door to sensible and sensitive engagement with older people to ask them what their plans are. And when you do that, you really have to preface it on the basis that it's to assist you as the employer with workforce planning.

“It's not about creating the environment where you can push them out the door. And, from there, you work out a succession plan as you need to.”

The fact that someone is older potentially predisposes them to mistreatment, Tobin said.

“If you think someone is toward the end of their career, then as an employer, you might inadvertently leave them out of opportunities for career progression or training in new skills that are nevertheless relevant to them,” he said. “You certainly don't want to do that. You need to make a conscious effort to be inclusive with older people, like any demographic, [and] make sure everyone feels appropriately included.”

Knowledge transfer and flexibility with older workers

With some jobs, it’s important to consider how best to transfer the knowledge of an older worker to those who will be taking over for them. In addition, HR teams should avoid the creation of “knowledge silos” where all critical knowledge, skills and data of an organisation lives in one person.

“It's about cross training,” Tobin said. “It's about workforce planning, training new people in potentially multiple roles so that when someone does leave – even if it's a relatively short notice – you're in a position to pick up fairly quickly without too much pain and suffering.”

Another important aspect HR leaders should consider is being open to flexibility with older workers.

“Everyone who's over 55 and who has worked for their employer for more than a year is… legally allowed under the Fair Work Act, under the National Employment Standards to request a flexible working arrangement,” he said.

HR teams should have a solid policy position in place not only for managing requests but, where possible, for alternative work opportunities for people who do want to transition over from full-time to part-time or consultancy, Tobin said.

“You might be able to identify roles that don't need full-time employees but do need relevant levels of skill, knowledge and experience where people can be engaged part-time.”