About seven years ago, Ontario eliminated mandatory retirement, following the lead of many other jurisdictions. This meant an employer could not lawfully discriminate against an employee or job applicant because he or she was 65 or older. Significantly, if a current employee was still able to do his or her job at age 65 or older, the employer cannot compel the employee to retire, or terminate them because of their age.
All good stuff. People who needed to put away a retirement nest egg, or replenish nest eggs shrunken since the 2008 meltdown might have a second chance. It also gave more flexibility to employers facing a demographic squeeze with the retirement of Baby Boomers. They could plan for staffing transitions and keep people on the job longer, given that there were fewer in the younger demographics. And, most important, if you like your work, and do it well, you shouldn’t be turfed out simply because of what your birth certificate says.
But the end of mandatory retirement has also meant that there is less certainty for staff planning purposes. Before, one could plan for replacements based on the knowledge that an employee would be leaving not later than his or her 65th birthday. Now, there could be a problem transitioning the replacement into a position, if the incumbent resolves to continue working indefinitely.
There’s also the unhappy task of sitting down with a long-service, loyal employee who may no longer be up to a job, or simply can’t be accommodated in a way that the employer can afford. For reasons of liability, all of this should be carefully documented.
Given the elimination of mandatory retirement, it’s no surprise that notice periods for terminating employees under common law have been growing longer. It used to be that an employer could give shorter notice periods to an employee approaching retirement age because it was known by all that the employee was approaching 65 and termination would occur. Since the change, court cases in Ontario have awarded up to 24 months of pay to former employees who were not provided sufficient notice, and had not indicated their desire to retire.
My suggestion is that employers need to start the conversation about retirement of older employees sooner, and more collaboratively. It’s a cinch that the vast majority of employees have given retirement a lot of thought by the time they are into their 60s. Engaging them in that narrative makes it possible to plan a transition to retirement, and the development of a replacement, who can be developed and mentored.
More than a conversation about setting a retirement date, it may involve a retirement “bonus” that is less than a court might impose. It might also involve retirement planning services for older employees. Not just financial planning, but true retirement planning, as in “what am I going to do with the rest of my life?” planning.
My friend and colleague Rick Atkinson has written and lectured extensively on the benefits and absolute necessity of having a good retirement plan in hand before you actually retire. The author of Don’t Just Retire – Live It, Love It!, Rick works closely with financial planners and employers to help employees apply proven retirement planning methods at a non-financial level.
Finally, a little perspective on the issue of non-retirement among older workers. There is actually only a small minority in the work force who’ve chosen to work past the age of 65, approximately 12% in 2012, far below any of the other demographic groups. That’s not likely to change dramatically, even as Baby Boomers enter their golden years. What’s good about it from a staff planning point of view, is that there’ll be a golden pool of talent and experience when employers need it most.