Business anger at proposals to abolish retirement age

Thursday, 29 July 2010

The Forum of Private Business, the small business support group, has hit out at plans to abolish the default retirement age.

The new Government this week said it intended to press ahead with the previous administration's plans to remove an employer's option to retire staff at the age of 65.

If the proposal goes ahead, businesses could be forced to start keeping on staff indefinitely in little over a year's time.

The Forum of Private Business believes that this could prove highly damaging to thousands of small firms. Currently, there is nothing to stop an employee working on past 65, providing his or her employer agrees to it.

Many businesses are well aware of the skills and experience older workers provide and are happy to maintain their employment.

However, if the default retirement age is scrapped, business owners will be forced to keep on workers past the age of 65, whether they want to or not.

This, the Forum believes, will prove a huge problem for thousands of small firms, hampering their abilities to plan for the future. The move could also open the door to costly and painful employment tribunals, as an employers' only means of ending employment will be through a 'capability dismissal' based on the declining competence of the worker.

In recent survey, just 4% of Forum members felt removing the default retirement age was justifiable.

Forum spokesman Chris Gorman said: "We are by no means disputing the valuable skills and experience older people bring to the workplace.

"Many small businesses are happy to keep on members of staff well into their late 60s and 70s – indeed, many Forum members themselves are well over 65.

"However, removal of the default retirement age will cripple some small businesses by removing the tools that help them to plan for the future.

"Most employees are certainly competent enough to work beyond the age of 65 without a significant deterioration in their abilities. However, for those employees not willing to leave voluntarily, there will eventually come a time when the needs of the business will have to be considered.

"In the absence of a default retirement age, the only viable option available to an employer is a capability dismissal based on the declining competence of the worker. We believe this would be an undignified and humiliating end to a career for most staff."

The Forum set out its views on the issue in response to a Government consultation in February, emphasising the need for small firms to be able to plan ahead, especially during times of economic uncertainty.

The Forum also pointed out that just last year, the Government defended the default retirement age in the High Court, arguing that it brings numerous social benefits.