Plans to scrap default retirement age 'not fit for purpose', says CBI

The CBI says the new rules are well-intentioned, but will make life difficult for employers. Is there a case for delay?

by Emma Haslett
Last Updated: 13 Dec 2010
Incoming CBI boss John Cridland hasn’t even taken over from Richard Lambert yet, and he’s already giving the Government a hard time. The director-general designate has called for plans to scrap the default retirement age to be postponed for a year, on the grounds that they’re ‘not fit for purpose’. According to Cridland, because the Government still hasn’t produced any legal guidance, businesses could find themselves open to tribunals from 65-year-olds who want to carry on working. The CBI says it doesn’t object to the move in principle, just that it’s worried about the occasional difficult situation. But is there any justification for managers applying different standards to sixty-somethings?

The change, which is due to come into effect on April Fools’ Day next year, will mean that businesses can no longer automatically dismiss people when they hit 65 purely because of their age. But Cridland says that there hasn’t been enough clarity around the new measures, and that without the mechanism to dismiss older employees, businesses that (for example) require a certain amount of physical strength among their employees, could suffer. In fact, the CBI reckons that (a rather high-sounding) one in five employees approaching the age of 65 could end up in a legal dispute with their workers.

The Government argues that businesses in that situation could use a ‘capability review’, which is legally enforceable. But Cridland reckons that process is ‘demeaning and disingenuous’, and could potentially cause tension in the office. More importantly, he says capability reviews tend to be ‘fraught with procedural uncertainty’, which could leave employers exposed to legal action from disgruntled workers.

The alternative view – as voiced by the TUC today – is that the proposals should be enforced as planned, because it’s not right that ‘workers lose their protection against arbitrary dismissal overnight upon reaching 65’. Although even the union accepts that employers will need further clarification on the legal procedures they’re required to follow before dismissing someone, to avoid the full force of the law.

The CBI is quick to point out that it has no objection to the principle, and accepts that this will only be a concern for a ‘small minority’ of businesses: many don’t subscribe to the DRA and allow their workers to keep going well after the age of retirement.

In principle, using the DRA to get rid of an unwanted employee feels like a managerial cop-out. Why should 65 year olds be held to different performance standards? If they can do the job and want to stay, they can; if they can’t, they should be managed out of the business, just like anyone else?

Then again, employers are always complaining that wading through the red tape required to get rid of troublesome employees is increasingly tricky and time-consuming. And that’s the last thing they need at the moment.

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