Posts Tagged ‘DRA’

Cause for concern in German DRA case?


It’s been rather quiet over the summer months in relation to developments on the various legislative issues that are likely to affect our clients’ employee benefit arrangements.

However, now that everyone is back from their holidays we’re beginning to see some interesting stuff appearing. The latest is in relation to the current grey area of the impact of the Default Retirement Age. Our friends at Mills & Reeve have issued one of their hr Law Live bulletins regarding a case heard by our old chums at the European Court of Justice.

You can click through to the original article here.

Although the judgement majors on the case of the German pilots being forced to retire at 60 there is one worrying aspect to it. For those of us regular flyers its worrying that air traffic safety doesn’t seem to be a legitimate reason to force a pilot to retire. The judgement seems to rest on the fact that safety considerations are not similar to the examples of legitimate aims listed in the original European Directive. These are things like employment policy, the labour market, or vocational training objectives.

As Mills & Reeve put it:

“(It) suggests a stricter reading of the Directive on this point than has been adopted by our domestic courts, which will be a worry for employers wishing to use a broad range of aims to justify age discrimination.”

It’s very likely that this is how Default Retirement Age legislation will evolve – by case law and precedent. It’s worth therefore keeping an eye on the stuff being issued by the UK and European courts when you’re framing your own policies.

For my part, my main concern is that the next time I get to the bottom of the aircraft steps at the airport there may be a stair lift installed for the pilot!

Steve Clark

The Devil is in the Detail – Retirement Age Regulations Published

You’ll probably remember that we wrote in our blog recently about the removal of the Default Retirement Age from April. The post is here.

Just a short post today to keep you up to speed. As you know we aim to trawl through all the information slushing about online to bring you stuff that’s relevant, fresh and that we think you’ll find interesting. If you are not one of our clients we’re sure that your advisers will be doing the same for you, won’t they?

Those all round good eggs at DLA Piper LLP have issued an update on the new regulations that have been issued by the government regarding the removal of the Default Retirement Age. In the old days the ink would still have been wet it’s the information is so fresh!

You can click through to the article here. There’s some really good stuff in there on Group Insured Benefits and the Transitional Arrangements as well as an excellent summary under Implications. I must say that the stuff that DLA Piper issue is really good like that in giving a good clear summary.

The insured benefit stuff isn’t quite as we were led to believe. In the previous post we wondered whether the government would “walk the talk”. Well the good news is that it has – almost.

The exemption only applies to employees who are the older of 65 or State Pensionable Age. At the moment that’s not a problem as they are broadly the same – younger for women. The government are planning to move us all to a State Pensionable Age of 68 in the future. That means you could be looking at covering employees up to 68.

Employers will need to give some thought to whether they still want to provide benefits like life assurance, income protection and critical illness to employees over State Pensionable Age.

As if you didn’t have enough on your plate to think about!

A couple of bits of background reading

As ever nothing stays the same. Just a short post to include a couple of links to some good material that I have been sent by the very nice people at Herbert Smith LLP and DLA Piper LLP. We thought we’d include the links and a little bit of background to save you the time. We try to scour the web for this sort of thing so our clients don’t have to!

Herbert Smith – Round up of pensions developments

Click here a good overview of everything that’s going on in the world of pensions. If your organisation participates in a final salary multi-employer pension scheme there’s a good write up of a Scottish case. It involves an insolvent employer and a £20m debt. We won’t say any more it’ll only spoil the ending!

There’s also a good article on a TUPE case where some employees ended up getting taxed on a compensation payment for loss of benefits on a TUPE transfer. Buyer beware is the motto for TUPE transactions.

DLA Piper LLP – Be Aware

Click here for the February edition of the DLA Piper Employment Law publication Be Aware.

There’s some good stuff on the removal of the Default Retirement Age and what you can and can’t do. There’s also a good round up of what’s on the horizon legislation wise. Finally, the At a Glance section is a good overview of the various pay rates, maximum awards etc.

Removing the Default Retirement Age– 4 things to worry about

We decided that we would take a break from writing about NEST and auto enrolment and focus instead on an issue that will one day affect us all – our retirement date.

The announcement today that the Government are pushing ahead with the removal of the Default Retirement Age has caught many people on the hop. If you feel inclined the Department for Business, Innovation and Skills (BIS) have published today the results of their consultation exercise. It makes interesting reading. To save you rooting around the web site here’s the link.

Knee Jerk?

It’s only three months away. Time is running outThat’s not a long time for employers, insurers and everyone else to consider what they need to do to comply with the new rules. Considering the forthcoming rules to automatically enrol employees in a pension scheme have taken years to get to the current Pensions Bill three months is a very short crash landing.

In our experience when anything like this is rushed into implementation by the legislators it normally ends up being bad news. A little too much knee jerk reaction.

Workplace Benefits – Left in limbo?

The rush to remove the DRA has left many employers in limbo about what to do about the benefits they offer their employees.

Many offer life assurance and income protection to employees. These benefits are insured with insurance companies.

Pensioner on Bench

Typically the insurers will only offer cover up to a maximum age – 75 usually. Clearly if an employee could in theory work into their 80’s the risk of death or long term illness grows massively. We’ve have clients who have had employees working into their mid-80’s even before these changes.

If the cost of these benefits starts to soar employers may simply remove them to avoid having to carry the risk for those employees that they could not get cover for. Serious concerns were raised in the consultation that without some form of clarity the removal of the DRA could have a negative impact on employees of all ages.

The good news is that in the consultation paper the government recognised this and they’ve said:

The Government recognises that there is a risk that employers may cease to offer insured benefits as a consequence of the removal of the DRA, and will therefore introduce an exception to the principle of equal treatment on the grounds of age for group risk insured benefits provided by employers.

The question is of course when and how will insurance companies react during the period when we are all in limbo. We have been in discussion with insurers about our own clients already and its really difficult to get any clarity.

Let’s keep our fingers cross that the government walk the talk – and soon – so we can all move forward with some clarity.

ACAS Guidance

The government are looking to ACAS to help employers with the compliance aspects of the change to the DRA.  They have issued a guidance booklet that you’ll find here.

In relation to the insured benefits we considered above the guidance booklet from ACAS states:

Some employers provide group risk insured benefits (including income
protection, sickness and accident insurance, as well as private medical
insurance) for their workers. These benefits will be exempt from the principle of equal treatment on the grounds of age so that it will remain possible for employers to cease to provide or offer these benefits once a worker has reached the age of 65 or the State Pension age for men, even if he or she decides to continue working beyond that age.

The age at which group risk insured benefits can be withdrawn will increase in line with increases to State Pension Age.

Far be it for mere mortals like us to question this but as far as I am aware I have yet to see any evidence of the exemption. The clock is ticking!

Bursting at the Seams?

Our worry about ACAS is that one if its other responsibilities is to mediate in employment disputes – including those that are due to be heard at an Employment Tribunal. With the huge amount of redundancies that have taken place in the current economic climate ACAS already have their hands full.

Last year there were 236,000 tribunal claims, up 50 per cent in a year – and nearly three times the number just five years ago.  It’s clear to us, and from the experience of our clients, that the resources of ACAS – certainly in this area – are stretched. With this extra responsibility – and a very short timeline – is it a step too far? Especially as like most bodies the funding ACAS receives is bound to be under close scrutiny.

One things sure from all this is that there’s some work to be done by employers and their advisers over the coming months. If you have any comments about the removal of the DRA and the points raised in this post we’d love to hear from you. Leave a comment below.