The Confederation of British Business (CBI) has urged the government to clarify its position on the rules around the default retirement age (DRA) and respond to businesses’ concerns over its removal.
The CBI warned that employers will face huge uncertainty and greater risk of tribunal claims if the government does not deal with what it calls the unintended consequences of its decision to phase it out from April 2011 (the law comes into play from October 2011, but employers need to give potential retirees six months notice if they want and staff member to retire. Hence the impact from April).
It also argued that the rules around retirement will be less clear for employers and their employees, making the retirement of staff potentially less dignified and more complicated.
The CBI is also concerned that no guidance or draft regulations have yet been produced to clarify what the new legislative framework will look like.
In the absence of a replacement to the DRA the CBI is calling for the change to be delayed until 2012 and for employers’ retirement conversations with staff to be protected. It also wants to see laws around performance management and unfair dismissal to be simplified and for the government to spell out how employers can use ‘objective justification’ to defend a retirement age.
In addition, the CBI wants the state pension age to be used as a milestone after which employers would no longer have to offer occupational benefits.
John Cridland, director-general designate of the CBI, said: “The ageing population and the shortfall in pension savings makes it inevitable that people will want to continue working for longer. Employers understand this, and businesses value the skills, experience and loyalty that older workers bring.
“However, in certain jobs, especially physically-demanding ones, working beyond 65 is not going to be possible for everyone. The DRA has helped staff think about when it is right to retire, and has also enabled †employers to plan more confidently for the future.”
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