Q: One of our longstanding full-time employees is aged over 70. What rights do we have as an employer in relation to succession planning?

A: An employer’s rights in relation to succession planning only extend to implementing strategies to manage and facilitate the transition of employees who are retirement age.

An employer cannot force retirement. Australia has no compulsory retirement age and retirement is a voluntary kind of resignation. A forced retirement due to an employee’s age would constitute unfair dismissal or adverse action under the Fair Work Act 2009 (FW Act), or age discrimination under the Age Discrimination Act 2004.

If an employee approaching retirement is no longer able to perform their duties, an employer needs to manage their performance in the usual way, generally through a formal objective performance review.

Some strategies for employers to help facilitate retirement include:

• Flexible work arrangements: Employers can develop policies in relation to flexible work arrangements that assist employees as they approach retirement, for example, by modifying an employee’s hours of work, patterns of work or location of work. Employees over the age of 55 have the right to request a flexible work arrangement under the FW Act if they have been employed for at least 12 months.
• Voluntary retirement packages: Employers may offer voluntary retirement packages that include financial incentives, such as severance payments, superannuation benefits and other entitlements.
• Approved early retirement schemes: Employers can establish approved early retirement schemes, aimed at older employees who are close to retirement age (usually between 55 and 65) to encourage them to retire.
• Planning for the departure of key players: This could involve training deputies to take over critical roles or taking out insurance policies to mitigate the financial impact of losing key employees.

Please note: The answer is correct at the time of publishing. Be aware that laws may change over time. Refer to Mature-age employees for current advice.