New age discrimination laws must not expose employers to the risk of litigation when staff retire, the CBI has warned.
Under the government’s proposals employees will be able to ask to work beyond the new default retirement age of 65.
But business depends on being able to plan for the future and staffing levels are a core element so employers want to have the final decision on retirement, subject to correct procedures being followed.
Consultation on the regulations, which are broadly welcomed by the CBI, ends today.
The draft rules will leave employers exposed to litigation and potentially costly employment tribunals, the CBI said.
The regulations amend the Employment Rights Act 1996 and allow workers to challenge ‘planned retirement’ as unfair dismissal regardless of whether or not the employer followed the correct procedures.
And in such circumstances the practice of tribunals is to leave employers to prove their innocence or risk costly rulings against them.
The CBI wants the regulations to ensure the final decision on retirement is left to the company without risk when the proper procedures have been followed.
John Cridland, deputy director-general of the CBI, said: “These regulations are a major landmark – protecting employees against unjustified age discrimination is the right thing to do.
“But government must ensure the regulations are also workable and business-friendly. These draft regulations don’t give employers and employees the clarity they need.
“Retirement is a vital management tool. It allows employers to plan for the future of their workforce and is a well-established part of the UK labour market.”
The CBI also wants to retain the existing statutory redundancy payment scheme which ensures that older workers who get made redundant get more money than younger ones. A replacement scheme with a flat rate for all would inevitably see older workers penalised.
Similarly, length-of-service benefits, which reward long-standing and loyal staff with extra days’ leave for example, should be exempt from the discrimination laws because the schemes are a vital tool for staff retention.
Last week Personnel Today revealed employers are getting ‘desperate’ for information. The Employers Forum on Age said organisations were running out of time to prepare for the October 2006 deadline.