Government plans to remove the Default Retirement Age (DRA) by 2011 have met with a mixed reaction from employment and business organisations.
The ruling, which was originally introduced by the previous government, will take away an employer’s option to retire staff at the age of 65 and has led to fears that companies could be forced to keep staff on indefinitely.
However, exponents of removing the DRA argue that the change will encourage better management and result in cost-savings for employers.
The Forum of Private Business has expressed concern that the decision could prove “highly damaging” to thousands of small firms, as business owners will be forced to keep on workers past the age of 65, whether they want to or not.
In recent survey, the Forum points out, just 4% of its members felt removing the default retirement age was justifiable.
Forum spokesperson Chris Gorman said: “We are by no means disputing the valuable skills and experience older people bring to the workplace. 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.”
In contrast, the Chartered Institute of Personnel and Development (CIPD) has welcomed the decision. CIPD Diversity Adviser Dianah Worman commented: “Our research has shown that many employees wish to work past retirement for differing reasons and many employers are already benefiting from allowing such flexibility. With the allowed transition period of six months and adequate support, employers will be able to continue to benefit from retaining the knowledge, skills and experience of older workers.
“We would encourage all employers to look at the potential cost saving benefits of continued good practice and management of their older workforce.”
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