Government must delay scrapping default retirement age, says CBI

The Government must delay scrapping the default retirement age (DRA) until it has filled the “legislative void” faced by employers, the Confederation of British Industry (CBI) has warned.

According to the CBI, companies will face “huge uncertainty” and a greater risk of tribunal claims if the Government does not tackle the consequences of its decision to abolish the DRA.

In the absence of a replacement to the DRA, the CBI has called for:

  • the abolition of the DRA, due to come into force from April 2011, to be delayed for a year so businesses can prepare;
  • retirement conversations between employers and workers to be protected from legal challenge;
  • the law on peformance management and unfair dismissal to be simplified and more balanced;
  • clarity on how companies can use “objective justification” to defend a set retirement age; and
  • employers not to be obliged to offer occupational benefits, such as death-in-service cover, beyond the state pension age.

Employment relations minister Edward Davey announced last week that the Government is to review workplace rights compliance and enforcement arrangements. The CBI has identified this as an opportunity to amend the legislative framework and help employers operate in the absence of the “DRA safety net”.

John Cridland, director-general designate of the CBI, said that there should be no changes to the retirement framework until the issues outlined by the CBI have been resolved.

“The Government is liable to say these questions will be answered by case law but they cannot duck these issues and allow 10 years of case law to decide for them. Employers don’t want to be test cases,” Cridland argued.

The Government has undertaken a consultation on the types of support required by business and will be publishing their response shortly.

A spokesman for the Department for Business, Innovation and Skills said that the vast majority of employers already choose to operate without fixed retirement ages and that many of the 500 respondents to the consultation strongly supported the plan that the department had set out.

“We are committed to helping and supporting employers adapt to the change in regulations and will be providing them with guidance – but we should not stop people from working just because they have reached a particular age,” he explained.

Despite supporting the call for more clarity in the current laws, the Chartered Institute of Personnel and Development (CIPD) has said that employers have had plenty of time to start thinking about how to manage without the DRA.

The CIPD’s diversity adviser, Dianah Worman, said: “The legal frameworks need to be fit for purpose but I think there has to be fairness embedded in those processes and they shouldn’t be skewed in favour of one party or the other.

“You don’t want to build into these frameworks excuses that mean employers have a cop-out for not delivering the basic law.”

From 6 April 2011 transitional arrangements for the abolition of the DRA will come in and employers will no longer be able to issue new notifications of retirement under the statutory procedure.

The TUC has supported the need for clear guidance for employers, but backed the Government’s abolition of the DRA. General secretary Brendan Barber said: “It cannot be right that workers lose their protection against arbitrary dismissal overnight upon reaching 65.”

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