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Small business owners could find themselves facing further difficulties with administration, as the compulsory age of 65 for retirement has been removed. The compulsory retirement age has been gradually phased out since April 2011, and is now obsolete. Employers can’t force an employee to retire at age 65 unless there are other grounds for terminating a contract, and not down to age alone.

Although a number of employees will welcome this move, some small businesses without a large Human Resources department may find the decision results in a greater administrative burden. Andrew Cave from the Federation of Small Businesses said:

“It will lead to a legal quagmire for a lot of small business owners. If you can’t get rid of someone, you then have to go through the process of performance managing someone out of an organisation, which if you have a big HR department and you’re experienced in these things is easy.”

He added that an average small business in the UK has four people in its employ. The owner and manager of the business may not have the expertise or resources for that situation. Liz Fields, chief executive of the Financial Skills Partnership contradicted Cave, saying:

“The skills and life experience that an older person can bring to a business actually helps that business become much more competitive.”

According to research by Norton Rose, some employers would offer financial incentives for older people to take retirement. The survey results also indicate that a number of employers will feel that recruitment of younger staff will be impeded by the removal of the compulsory retirement age.

About The Author

Lee Murphy

MAAT and ICPA accountant, with a passion for making accountancy and bookkeeping accessible. Other interests include cloud-based software development for web and mobile access, keeping fit, reading, and entrepreneurship.

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