The Government has confirmed that it is proceeding with plans to withdraw the default retirement age later this year, prompting a mixed response from business and employer groups.
Following a period of consultation, the Employment Relations Minister, Edward Davey, told MPs that the Government would be phasing out the DRA between 6 April and 1 October 2011.
During the transitional period, retirements that were already in motion can continue through to completion, provided that:
- a notification of retirement is issued by the employer prior to 6 April 2011;
- the date of retirement falls before 1 October 2011; and
- the requirements of the statutory retirement procedure are met.
Compulsory retirements using the DRA will therefore cease completely on 1 October 2011. However, it will still be possible for individual employers to operate a compulsory retirement age, provided that they can objectively justify it.
While the Government hopes the additional freedom for workers will boost the UK economy, business leaders have expressed concerns over the changes.
The Confederation of British Industry (CBI), which had been lobbying for the plans to be postponed, described the publication of guidance on the removal of the DRA as ‘too little too late’.
‘The Government’s decision to scrap the DRA leaves businesses with a number of difficult practical issues,’ warned the CBI’s Director-General Designate, John Cridland. ‘The impact on employers, especially smaller ones, will be considerable […] Less than three months is not enough time for businesses to put in place new procedures. The outcome will be more unpleasant and costly legal action.’
Its thoughts were echoed by the manufacturing organisation the EEF, which claimed the reforms had been ‘rushed through’ and would make it harder for companies to create jobs, plan staffing needs and would provoke expensive claims.
However Dianah Worman, public policy adviser at the Chartered Institute of Personnel and Development, welcomed the announcement, arguing that the existence of the DRA has acted as a ‘smokescreen’ for poor management.
‘With the clear protection in the legislation of a right for employers to offer an objective justification of a fixed retirement age for occupations where physical capacity is a particular requirement, employers have nothing to fear from this legislation,’ she said.