Rise in retirement age may bring further red tape

Croner, the business advice provider, suggests that the proposed increase by the Pension Commission would pose problems when it comes to hiring and firing older workers.

The firm believes possible risks to businesses would include claims of unfair dismissal, disability discrimination and age discrimination, if they refuse to employ or dismiss a worker based on their age, regardless of their capability to do the job.

Croner believe the shortfalls of the state pension system should not be dumped on employers, many of which may be forced to continue employing older workers in fear of tribunal cases.

Employers are set to get more worried when further protection for older workers arrives in 2006, which may even outlaw the use of retirement ages altogether.

Richard Smith of Croner said, “If the retirement age was increased it is likely that so too would the age at which an employee can raise a claim of unfair dismissal, meaning employers would no longer have a 'get out' clause to dismiss workers when they reach 65.

"This could lead to employers treating older workers more harshly during recruitment, believing that refusing employment in the first place is less risky than having to ultimately dismiss an unsatisfactory older worker."

In a recent survey carried out by Croner, 85 per cent of HR professionals agreed that the retirement age should remain unchanged.

Employers are also being warned not to be confused by the barrage of recently introduced legislation such as the updated Disability Discrimination Act.

Smith said, "Employers need to understand the difference between capability and disability if dismissing an older employee, as they could face a claim of disability discrimination, for which there is no maximum fine."