The timescale for the abolition of the default retirement age (DRA) is rushed and will hamper business during the economic recovery, argues Abigail Morris, employment policy adviser at the British Chambers of Commerce (BCC).
Next year is a crucial year for economic recovery. Our forecast for the UK economy predicts that unemployment will peak in the first quarter of 2011. If the regulatory environment does not support private sector job creation there is a risk that millions of young people and the long term unemployed in particular will be lost to the labour market forever.
Against this backdrop, it seems odd that 2011 was chosen by the previous Government as the year for several new employment regulations to be enacted. The introduction of the Agency Workers Directive, the introduction of Additional Paternity Leave Regulations and some provisions in the Equality Act will all add cost and time pressures to business.
The coalition Government has pledged to cut red tape affecting business, but seems to have inexplicably chosen 2011 as the year to abolish the Default Retirement Age (DRA).
Whichever side of the DRA fence you sit on – and the BCC is firmly against its abolition – it does appear that implementation is being carried out with unusual haste. The diagram below shows other major employment law changes, and indicates how much time business has had from consultation to implementation to prepare, plan and alter procedures.
BCC analysis shows the average length of time between consultation and implementation of employment law is 17.2 months and the median is 16 months. The nine months for the default retirement age is very short, particularly for a piece of legislation which will affect all 1.3 million employers in the UK.
Many employers that removed their DRA before being required to by legislation took many years to do so successfully and mitigate the risks to the business – BT, for example, took six years to fully remove their compulsory retirement age.
The profile of the businesses that are most likely to use the DRA also gives weight to the argument that more time is necessary before its removal. The BCC Monthly Business Survey in February 2010 showed that businesses with between 50 and 249 employees were most likely to make use of the DRA. These medium sized businesses are vital for the UK economy to expand and create jobs for economic recovery to be assured.
Instead of spending time and money rushing through changes to their appraisal systems (or even creating one from scratch) and hurriedly consulting with staff on changes, these business should be concentrating on their core business activity. And they should be given the time to fully consider what the removal of the DRA means for their business.
The BCC wants employers to be given enough time to adequately comply with the abolition of the DRA, and mitigate the effect that it will have on their businesses. With the Government’s own Fair Treatment at Work report showing that only 1% of people aged over 60 feel discriminated against on the basis of age, this rush to legislate is unwarranted.