Age Discrimination 'No Longer Just a Timebomb' - Employment Law News Autumn 2003

01 October 2003

Age discrimination is again in the spotlight following recent publication of the Government’s ‘Equality and Diversity: Age Matters’ paper, on which consultation closes 20 October 2003. The UK must in any event pass legislation outlawing age-based discrimination in employment and vocational training under the terms of the EC’s Equal Treatment Framework Directive. New laws are likely to be implemented in October 2006.

Outlawing age discrimination is likely to bring net economic and social benefits. Wider participation rates for older workers should reduce the burden on state benefits and increase tax revenue. With an ageing population, growing pensions crisis, low investment returns and fewer young people entering the labour market this also appears to make good practical sense.

Where are we now?

In 1999 the Government published a Code of Practice, ‘Age Diversity and Employment’, to promote the business benefits of age diversity. A voluntary code with no statutory basis, it has had little impact on commercial practices.

In recent years there have been a number of legal cases brought that challenge the lawfulness of age-based discrimination. In the most high profile of these, Secretary of State v Rutherford & Bentley, the Employment Tribunal decided in 2002 that the statutory imposition of 65 as a default retirement age for employment protection purposes is discriminatory against men, men being more economically active than women at that age. The decision, grounded in sex discrimination law, was appealed and overturned by the EAT, in October 2003, on statistical re-analysis, but the potential uncertainty and interplay of issues remains.

Where are we going?

When implemented in 2006, age discrimination laws are likely to have a material impact on HR practices and procedures, e.g.:

• Recruitment, selection and promotion – on the whole, employers will no longer be able to make decisions based on age. Employers will need to review their application forms and remove references to date of birth. Adverts will need to be age neutral (e.g. ‘young and dynamic professional’ will be unlawful). Employers will need to consider whether they can justify requiring a minimum number of years experience for a job (this is likely to disadvantage younger applicants) or fixing a maximum age for recruitment (potentially still permissible when there are particular training requirements for the job or the need for a reasonable period of employment before retirement so to allow for a return on training for the employer)
• Pay and non pay benefits – whilst it is rare for pay and non pay benefits to be wholly or partly based on chronological age, it is common for employers to base them on length of service. Examples might include incremental pay scales or extra holiday entitlement. These can be discriminatory against younger workers. While such practices will still be justifiable, the employer will have to show that there are good business reasons for the practice e.g. on the grounds that it encourages and rewards loyalty
• Retirement age – the Government is considering and has consulted on two possible options. The first is to make mandatory retirement ages for employees unlawful unless they can be justified in the employer’s particular circumstances and they are appropriate and necessary (perhaps, for example, on the grounds of health and safety or to facilitate succession or other employment planning). The second is to preserve an employer's current freedom to impose a ‘normal retirement age’, but to increase the default age to, say, 70. In these circumstances if the ‘normal retirement age’ for the job were below 70, an employer could force an employee to retire without having to justify its decision. At the present time, not knowing which option the Government will pursue, it is recommended that employers carry out an age audit on what they consider to be an appropriate and necessary normal retirement age. This should look at the issue from as broad a perspective as possible, in which connection workforce consultation might play an important role. Simply tracking the pension age is highly unlikely to be sufficient
• Unfair dismissal – under the Employment Rights Act 1996 (ERA) employees are currently unable to claim unfair dismissal if they have reached the ‘normal retirement age’ for the job or, if none exists, the age of 65. This will change when the new laws are implemented and will be linked to the Government’s decision on which option to take on retirement ages
• Redundancy – an employee cannot claim statutory redundancy pay after the age of 65. This is likely to change after the new laws are implemented

In addition the ‘common’ practice of retiring off older employees will be directly age discriminatory unless in certain narrowly defined justified circumstances.

Although we are still some way from implementation, employers should now be planning for the changes. There is little doubt that after implementation of the new laws,HR practices and procedures will be governed within an even more complicated legislative framework.

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

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