Age Discrimination "An Employer's Timebomb!"

02 August 2006

On 1 October 2006, legislation outlawing age-based discrimination will be implemented for the first time in the UK. The Employment Equality (Age) Regulations 2006 are being hailed by many as the most significant upheaval in employment law for 30 years. The new laws will prohibit discrimination on the grounds of age in employment and vocational training, unless the discriminatory aspect can be shown to be objectively justified. This will require a legitimate aim and proportionality in achieving it.

There is little doubt that following the implementation of the new laws, HR practices and procedures will be governed within an even more complicated legislative framework. Here is a brief summary of how some of the principal proposals might affect employers:

Recruitment and selection

Generally, employers will no longer be able to make recruitment and selection decisions based on age.

Employers will need to review their arrangements for determining to whom they should offer employment. This includes the practice of limiting recruitment to, for example, university recruitment fairs or limiting advertisements to a publication that has an age specific readership.

Care should be taken when preparing an advertisement or job specification. Examples that might provide an inference of age discrimination include, “young and dynamic professional”, “funky young company”, “mature”, “vibrant” or “upbeat”. Employers will also need to consider whether they can justify a specified minimum number of years experience for a job, as this could disadvantage younger applicants. The employer attempting to justify would need to establish that the requirement was necessary and proportionate rather than a mere preference.

Good practice recommends that questions about age and date of birth are removed from the main application form and placed in a separate diversity monitoring form. Application forms should also avoid requesting information from which the applicant’s age can be inferred, unless the information is necessary.

Service related pay and benefits

Many employers require their employees to have completed a certain length of service before pay is increased or benefits given. Examples might include incremental pay scales, extra holiday entitlement or share options. These can be discriminatory against younger workers, who have not completed the required length of service. This will be unlawful unless the employer can establish one or more of the exemptions below:

Firstly, any length of service requirement of five years or less. Secondly, any length of service requirement directly based on those in statutory schemes, for example, redundancy schemes providing enhanced benefits. There is also a general exemption covering workers with more than five years service, when the employer can justify that, by awarding the benefit it fulfils a business need, for example, by encouraging loyalty or motivation or rewarding the experience of the worker. This provides a relatively straightforward route for employers to provide service based rewards and will be widely used. The different and lower age rates under the National Minimum Wage will, however, still remain. Occupational pension schemes will also operate largely as before.

Retirement age

A default retirement age of 65 will be introduced. Whilst an employer will still be able to retire an employee at an age below 65, this will only be possible if the employee has a normal retirement age below the age of 65 and that lower retirement age is objectively justified. Whilst many employers have previously operated a lower retirement age, it is anticipated that in the future it will be difficult for employers to objectively justify a below 65 age. Therefore, most employers operating below 65 retirement ages will need to raise them to 65. This will not, of course, prevent an employee from requesting to retire at a lower age, particularly when benefiting from the terms of an occupational pension scheme with a below 65 benefit date. The Government will review the default retirement age in 2011; five years after implementation.

Employers must also follow a prescribed procedure when dismissing an employee on the grounds of retirement. Failure to follow the procedure is likely to render the retirement dismissal unfair leading to claims for unfair dismissal. The procedure will require the employer within specified timescales to notify the employee of their planned retirement date and the right to request not to retire. If the employee requests to work beyond their planned retirement date, the employer will be required to meet with the employee and formally consider their request. If the request is accepted in full or in part, the employer should state for what period the employment is extended. If the request is refused, the employer is under no legal obligation to give a reason, although employers must be careful not to fall foul of other forms of discrimination, for example disability, race or sex. The employee is also given a right of appeal against the decision.

Transitional arrangements will exist for employees who are dismissed on the grounds of retirement between 1 October 2006 and 31 March 2007.

Unfair dismissal and redundancy

The statutory upper age limit for bringing claims for unfair dismissal and redundancy will be removed. This is likely to lead to an increase in claims from older workers. However, the one-year qualifying length of service for unfair dismissal and two-year qualifying length of service for redundancy will be maintained. Length of service, the 20-year cap and the multiplier based on age bands will remain when calculating a statutory redundancy or basic award payment for unfair dismissal.

Employers should be reviewing their HR practices and procedures. It is recommended that employers conduct an audit to assess the age composition of staff, evaluate pay and benefit structures, check recruitment, application and retirement procedures as well as employment rules and procedures in an attempt to eradicate potential discrimination and discriminatory practices.

For more information please contact Andrew Masters, Partner & Head of Employment.
 

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