Government U-turn on plan to end age discrimination in workplace

The Government backed down on plans to do away with age discrimination in the workplace yesterday when it extended employers' rights to impose a maximum retirement age on their staff.

The Government backed down on plans to do away with age discrimination in the workplace yesterday when it extended employers' rights to impose a maximum retirement age on their staff.

The move concludes almost two years of consultation on the issue, during which the Department of Trade and Industry has completed a volte-face on the controversial topic. When its plans were first laid out at the end of 2002, the DTI insisted retirement ages would be scrapped altogether by October 2006.

But under its final proposals released yesterday, employers will now be able to continue retiring employees at 65, on condition they give due consideration to any applications to work longer. Employers will be able to reject the application if they believe there is a good "business" reason why they should not continue working.

The new rules will not be enforced until 2010, after which there will be a further review of the issue.

Charities and unions rushed to condemn the news yesterday, arguing it was a big step back from the Government's original plans. Frances O'Grady, the TUC's deputy general secretary, said she was concerned that the new rules would make it too easy for employers to say no to staff who asked to work longer.

"Unions oppose age discrimination and back the EU directive that requires the UK Government to end age-based retirement policies," she said. "We are therefore unhappy with today's announcement. We still do not have a clear date for ending age-based retirement policies as the directive requires. While we recognise there is a case for some transitional arrangements, the Government today has neither given business any certainty about when the UK will meet its EU obligations, nor given employees any assurance that there will be new rights that will extend retirement choice in practice."

But Dianah Worman, the diversity adviser for the Chartered Institute of Personnel and Development, said the Government's new rules would only delay the inevitable scrapping of retirement ages, adding that it was a shame it could not have pushed ahead with its original plans now. In the meantime, she said, many people may suffer from the DTI's interim plans.

The CBI was a lone voice in welcoming the proposals, saying the decision was both "sensible and pragmatic". John Cridland, its deputy director-general, said: "It... means there is a clear cut-off point to employment, which is important if you don't want to embitter the retirement process and trigger an explosion of tribunal claims. Neither employers or employees want people to work forever."

Patricia Hewitt, the Secretary of State for Trade and Industry, said: "We have listened to strong representations arguing that many companies still rely on default age for business planning purposes; and there is a danger that without one, there could be adverse consequences for occupational schemes and other work-related benefits."