More thinking needed ahead of retirement age change

The CBI  has called upon the government to clarify its thinking on the planned scrapping of the default retirement age in order to avoid the risk of extra tribunal claims. The employers’ group argued that employers 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. 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 with the CBI describing the measure as one of the “biggest changes to employment law in 2011” It  also maintained that the rules governing retirement will be less clear for both employers and employees. Although the phasing out of the default retirement age has already been pencilled in, the CBI claimed that the government has yet to produce any draft guidance outlining the new legislative framework. To make good the regulatory void, the CBI has said that the government should delay the change for a year. Other recommendations include the safeguarding of retirement conversations; 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. Currently, employees have the right to request to work beyond the age of 65, and in over 80 per cent of cases these requests are accepted by employers. Four out of five employers set a default age for retirement, but it is only used in a minority of cases, where it is not possible for an employee to continue post-65. They do this, the CBI continued, because capability reviews are not an effective or timely way of managing the issue.