Chancellor George Osborne's Comprehensive Spending Review (CSR) held few surprises for those interested in the world of work aside from the revelation that the state pension age for both men and women would rise to 66 by 2020.

More pressing for employers, however, were two pieces of legislation unveiled either side of the CSR. In the summer the government said it was scrapping the default retirement age (DRA) from October 2011. This means employers will no longer be able to force an employee to retire at 65. The legislation states that they will not be allowed to issue forced retirement notices from April 2011.

Couple this with the news two weeks ago that every company will have to offer an occupational pension from 2012, thanks to the coalition rubber-stamping the Labour government's plans to introduce auto-enrolments, and you have what the Forum of Private Business (FPB) calls a 'double blow' for business.

The FPB argues that the removal of the DRA, combined with the costs and administrative burden of a pension, will discourage SMEs from creating permanent jobs.

As Forum member Tracy Hoather, who runs a small courier business, puts it: "You can have problem employees at any age and getting rid of bad apples is a nightmare. The difference is now those over 60 will claim age discrimination every time. The government wants us to allow staff to dictate how often and when they'll work."

Now, whenever there is any change to employment legislation, employer naysayers start bleating. Remember flexible working? And minister of state for pensions Steve Webb has taken business concerns into account, simplifying the process and introducing a 12-week exemption that means companies with a high turnover of staff or large number of seasonal workers, such as those in the food sector, do not have to spend time and money enrolling employees into pensions they will not continue.

However, in this case the FPB may have a point. A new Chartered Institute of Personnel Development survey finds 41% of workers planning to work beyond retirement age. Meanwhile, Chartered Management Institute research shows only 14% of managers consider their organisations well-placed to cater for older workers. A rise in employment tribunals could follow.

These fears may well encourage SMEs to rein back job creation and turn to temporary staff instead. At a time when it is precisely these companies to which the government is turning to secure the economic recovery and provide jobs as the public sector is scaled back, the moral and macro financial case for change may well be compelling, but the timing is questionable.

Siân Harrington is editor of Human Resources magazine

Topics