Under the proposal, employers would not be allowed to dismiss staff because they had reached the age of 65.
The Forum of Private Business (FPB) says this could prove highly damaging to thousands of small firms.
Currently, an employer can force an employee to retire at the age of 65 without paying any financial compensation. If the default retirement age is scrapped, business owners will have to keep on workers past the age of 65, whether they want to or not.
“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,” comments the FPB’s Chris Gorman.
Dr Adam Marshall, director of policy at the British Chambers of Commerce (BCC), says: “Employers agree that the DRA is currently too low and needs to rise for both economic and demographic reasons. However, if ministers want to make a positive change, they should either raise the DRA in line with the state pension age, or offer employers a new dismissal route that helps businesses manage their workforce more effectively, regardless of age.”
Entrepreneurs aren’t impressed either. “What this proposal will do is to force employers into a situation where they have to spend huge amounts of time taking older employees through a disciplinary process in order to end their employment,” says Stuart Mitchell of Derbyshire-based Machine Building Systems.
“To say that retiring older workers gives younger employees a better chance is ridiculous,” spits Charlie Mullins of Pimlico Plumbers. “Younger workers need more experienced employees to help them learn. Twenty per cent of my workforce is over 55, with some in their 80s, and they are well-respected by colleagues and customers.”
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