The CBI has warned that the coalition government’s proposals to phase out the Default Retirement Age from April next year are too swift and will make workforce planning “next to impossible”.
The government’s consultation document, which was released today, suggests that the DRA should be officially scrapped on 1 October 2011. It also proposes that employers would not be able to issue any notification of compulsory retirement to staff under existing DRA regulations from 6 April 2011.
As a result, for six months, compulsory retirement would apply only to those staff that received notification before 6 April and whose retirement date was after 1 October. The move would also mean there was no further need for employees to have a ‘right to request’ that they work beyond retirement or that employers have to give a minimum six months’ notice of retirement.
Employment relations minister Edward Davey said: “We are committed to ensuring employers are given help and support in adapting to the change in regulations, and this consultation asks what kinds of support are required.”
But John Cridland, deputy director general of employer lobby group the CBI, said that the government’s decision to abolish the DRA left businesses with many unresolved problems, while its timetable gave them little time to prepare.
“Scrapping the DRA will leave a vacuum and raise a large number of complex legal and employment questions, which the government has not yet addressed. This will create uncertainty among employers and staff, who do not know where they stand,” he attested.
To address such practical issues, it would be necessary to formulate more than just a code of practice. Instead changes to the law would be required to deal more effectively with “difficult” employment situations, Cridland added.
“For employers, these proposals could make workforce planning and providing some employment benefits such as critical illness cover, next to impossible. A default retirement age helps staff think about when it is right to retire and also enables employers to plan more confidently for the future,” he said.
Moreover, in certain jobs, especially physically demanding ones, working beyond 65 was simply not going to be possible for everyone, Cridland added.
The consultation will close on 21 October this year and the document was released alongside a summary report of evidence and research on the DRA from the Department for Business, Innovation and Skills.
