Scrapping the default retirement age “could harm companies”

The scrapping of the default retirement age (DRA) could cause employers a lot of problems, especially in the short term, employment law specialist Bibby Consulting & Support has warned. The company said there was no real need to change the existing retirement legislation because statistics showed that most requests to continue working beyond 65 were agreed to by employers and only a few people have been forced to retire against their will. Under current legislation, compulsory retirement at the age of 65 is seen as a fair reason for dismissal and the employee is unlikely to be able to make a claim for discrimination. Also, employers can set their own ‘objectively justified’ retirement age for their business which may be lower than 65. Finally, companies are not obliged to recruit anyone who is within six months of this age limit or of the DRA. However, under the new law, while companies will still be able to have their own retirement age, the DRA of 65 will no longer exist. Bibby Consulting & Support – which has produced a factsheet for businesses worried about the new legislation – says these changes could have a negative impact on companies’ opportunities to take on fresh new talent because the number of vacancies that would normally occur through natural wastage when employees retire would be reduced. “We can see the removal of the default retirement age as potentially burdensome on most employers,” says Managing Director Michael Slade. “Retirement has historically allowed employers to offer their ageing workers a dignified way to cease work where performance is often seen to worsen. In addition, it has helped many employers to manage succession planning, helping younger workers to get on to the first step of the ladder and progress through their careers.” Slade adds: “The government seems committed to reducing unemployment rates and encouraging apprenticeships – the Prime Minister recently met with UK business bosses to discuss increasing recruitment – yet the removal of the default retirement age will limit the amount of available jobs for those who are unemployed or entering their working lives for the first time as older workers hold on to their jobs for much longer.” One of Bibby Consulting & Support’s customers, replacement window company Strata Windows of Stoke-on-Trent, says that the new legislation won’t alter its approach to retirement. Sales Director Rob Dale explains: “When any member of our staff is approaching retirement age – roughly 12 months before they are due to finish – we give them an option to apply to stay on. If they think they are more than happy and capable of doing so, and we agree with that, then we would continue with their employment, probably on a 12 month rolling contract basis. We’re more than happy to do that as long as the person is in good health and working up to par.” He adds: “However, if the directors of the company deemed that person not to be suitable any longer we would enforce the retirement as per our terms and conditions of employment. This proposed change in employment law won't affect our company’s policy on retirement." On another proposed change to employment law, Bibby Consulting & Support does support the government’s plans to increase unfair dismissal eligibility criteria which would make it easier to remove unsuitable employees. “At the moment, employers are often obliged to go through very long procedures to dismiss employees,” Michael Slade says, “and the burden imposed upon them for staff members with more than one year’s service is far too high. Increasing the unfair dismissal eligibility criteria to two years would allow employers a greater timeframe to assess a person’s suitability and cut a lot of red tape on businesses who want and need to focus their efforts on economic recovery following the recession.” - ENDS -

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