Business groups react with fury to DRA timescale

Business groups have reacted furiously to government plans to phase out the default retirement age (DRA) from April next year, arguing that employers will be left with insufficient time to prepare.

Currently employers can force staff to retire at the age of 65 regardless of their circumstances, but under new plans proposed by the Government yesterday, employers will not be able to issue any notifications for compulsory retirements using the DRA procedure from 6 April 2011. The DRA will officially be scrapped on 1 October 2011.

However, employers’ bodies are angered by the short timescale and some fear the change could lead to a rise in employment tribunal claims from older employees who believe they have been unfairly forced to leave their job.

David Yeandle, head of employment policy at manufacturers’ organisation EEF, said: “The proposed timetable gives employers virtually little or no time to alter their policies and practices before such an important change in employment legislation is introduced.

“There is also a real danger that it could open a Pandora’s box with the onus being placed on employers to prove whether older employees are capable of continuing in their current role. Inevitably, this could lead to employment tribunal cases from some older employees who have been dismissed rather than allowed to retire.”

John Cridland, CBI deputy director-general, agreed: “The decision to abandon the DRA leaves business with many unresolved problems, and the Government’s timetable to scrap it will give companies little time to prepare

“For employers, these proposals could make workforce planning and providing some employment benefits, such as critical illness cover, next to impossible. A default retirement age helps staff think about when it is right to retire, and also enables employers to plan more confidently for the future. In certain jobs, especially physically demanding ones, working beyond 65 is not going to be possible for everyone.”

Dr Adam Marshall, director of policy at the British Chambers of Commerce said: “Employers agree that the DRA is currently too low and needs to rise for both economic and demographic reasons. However, if ministers want to make a positive change, they should either raise the DRA in line with the state pension age, or offer employers a new dismissal route that helps businesses manage their workforce more effectively, regardless of age.”

Chris Gorman, spokesman for the Forum of Private Businesses added: “Removal of the default retirement age will cripple some small businesses by removing the tools that help them plan for the future. Most employees are certainly competent enough to work beyond the age of 65 without a significant deterioration in their abilities. However, for those employees not willing to leave voluntarily, there will eventually come a time when the needs of the business will have to be considered.”

Abolition of the default retirement age FAQs

Does the Government have plans to abolish the default retirement age?

Will there be transitional arrangements for the abolition of the default retirement age?

How will employers deal with retirement after the abolition of the default retirement age?

Will employers still be able to operate a compulsory retirement age after the abolition of the default retirement age?

Will anything replace the current statutory retirement procedure after the abolition of the default retirement age?

Will the statutory retirement procedure be repealed when the default retirement age is abolished?

After the abolition of the default retirement age, how should employers deal with employees over 65 who are underperforming?

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