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Retirement age change needs rethink

The government has been urged to clarify its plans for scrapping the default retirement age in order to avoid the risk of extra tribunal claims. The call has come from the CBI.

The employers group argued that firms could face greater risks of tribunal claims if the government does not issue more precise legal clarity on the consequences of dropping the default retirement age of 65 as from April 2011.

Under the new rules, employers will no longer be able to terminate the employment of staff members simply because they have reached 65. But the CBI wants to see the new legislation put back a year in order to sidestep the “huge uncertainty” and the “unintended consequences” such a move would involve.

As from April next year, employers will not have the right to force someone to retire once they hit 65. The CBI described the measure as one of the “biggest changes to employment law in 2011” yet maintained that the rules governing retirement will be less clear for both employers and employees.

To make good the regulatory gap, the CBI has said that the government should delay the change for a year. Other recommendations include a simplification of the law on performance management and unfair dismissal; a spelling out of how employers can use Objective justification to defend a retirement age; and the establishment of the state pension age as a milestone after which employers would no longer have to offer occupational benefits.

John Cridland, the CBI’s director-general designate, commented: “The ageing population and the shortfall in pension savings make it inevitable that people will want to continue working for longer. However, in certain jobs, especially physically-demanding ones, working beyond 65 is not going to be possible for everyone. With the scrapping of the DRA in April, a legislative void is opening up. We need to modernise our employment law framework to ensure that it is fit for purpose.”

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