Age discrimination legislation due to come into force on 1 October 2006, will bring about fundamental changes in all aspects of the employment relationship from recruitment to retirement.
The aim of the anti-ageism provisions is to change the way we traditionally think about age in the workplace. If we are honest, we would all admit to making general assumptions that age and ability are somehow inextricably linked.
The need for the legislation is clear. Changing demographics mean that the available workforce is getting older, and, since we are all living longer, pension provision is in crisis. In addition, there is widespread evidence of age discrimination in the UK. Statistics produced by the Employers Forum on Age estimate that nine out of 10 people aged over 50 receive no training from their employer, and close to half of young workers say they have been held back at work because of their age.
Outline of the Regulations
The regulations will:
- prohibit age discrimination in recruitment, promotion and training
- prohibit retirement ages below 65 - unless objectively justified
- require employers to inform employees in writing, and at least six months in advance, of their intended retirement date
- extend the right to bring unfair dismissal and redundancy claims to employees over 65
- impose a duty for employers to consider employees' requests to continue working beyond retirement age.
Types of discrimination
As with other discrimination legislation, there are definitions of direct discrimination, indirect discrimination, harassment and victimisation.
An example of direct discrimination is not to recruit someone:
- because of their age
- because they were aged over 50, or
- because of their perceived age.
Indirect discrimination arises where there is a policy, requirement or criterion which impacts less favourably on employees of a certain age and which cannot be objectively justified. For example, this would include a policy of selection for redundancy on a 'last in first out' basis, which would affect younger employees less favourably, or a requirement for a number of years experience when recruiting.
The definitions of harassment and victimisation are consistent with those used in the other strands of discrimination law.
Defences
Unlike other discrimination legislation, both direct and indirect discrimination claims can be defended if the employer can objectively justify the different treatment, and show that it is a proportionate means of achieving a legitimate aim.
What is a legitimate aim? The Department of Trade and Industry (DTI) gives some examples of those aims which are likely to be classed as genuine and justifiable:
- health, welfare and safety
- employment planning
- particular training requirements
- encouraging and rewarding loyalty
- the need for a reasonable period of employment before retirement
- recruiting or retaining older people.
Employers will need to show evidence that a legitimate aim applies and achieves its objective in a proportionate way. In practice this is likely to be difficult. How do you show that a particular policy does actually encourage or reward loyalty? How can you demonstrate health and safety reasons for not employing anyone over a certain age when there are such differences between individuals' fitness at all ages?
Dealing with retirement issues
Issues surrounding retirement are likely to create problems for if an employee does not want to leave employment, retirement may constitute a dismissal and direct age discrimination. Given that two out of three employees are said to want to continue working, this is likely to have a significant impact.
Retirement age
The age regulations provide for a default retirement age, which will allow employers to retire employees at or above 65 years of age. Compulsory retirement below 65 years will only be lawful if the employer has objectively justified it, for example on health and safety grounds.
Unfair dismissal and retirement
Employees over 65 or over retirement age will have the right to bring an unfair dismissal claim and have the right to redundancy payments if they apply. However, the employee will have to prove that the reason for the dismissal is something other than a genuine retirement. The detailed rules are quite complex but practically, there will be a presumption of retirement where the dismissal takes place at retirement age, the employee has been informed of the retirement date in advance and the employer has complied with the 'duty to consider' procedure (as set out below). If this has been done it will be hard for the employee to succeed in an unfair dismissal claim.
Conversely, if the employer has failed to follow the correct procedure and retires an employee without warning, there will be a strong presumption that the retirement is not genuine, and the dismissal will be automatically unfair.
Duty to consider procedure
The intention behind the duty to consider procedure is to give employees more choices about how long they work and when they retire.
Procedural steps
- The employer has a duty to inform the employee in writing of the intended retirement date and the right to request to continue working at least six months (but no more than twelve) before the intended retirement.
- The employee has a right to request not to be retired and to request to continue working either (a) indefinitely, (b) for a fixed period or (c) until a fixed date.
- The employer must meet with the employee within a reasonable time-frame and inform him of the decision as soon as is reasonably practicable, but there is no requirement to give any reasons for refusing the request. The employment will continue until this has been done, even if this is after the intended date of retirement.
- The employee will be able to appeal against the employer's decision and the appeal meeting can be held after the retirement has taken effect.
Service-related benefits
All service-related benefits are potentially indirectly discriminatory as they favour longer serving employees who are likely to be older. The age regulations, however, provide a complete exemption where the employee has less than five years service.
Where an employee has more than five years' service the employer has to show that it 'reasonably appears' to him that the criterion of length of service 'fulfils a business need,' for example by encouraging the loyalty or motivation or rewarding the experience of some or all of his workers. This is an easier test to establish than the general test of objective justification.
Redundancy payments
Many employers have contractual redundancy policies which are more generous than this statutory minimum and often with enhanced benefits instead. These will be permitted under the age regulations provided they mirror the statutory scheme.
Action points
These are some of the practices that employers need to review now, to ensure compliance with the age regulations.
1. Keep recruitment adverts age neutral
- Avoid age limits in recruitment adverts or the use of trigger words such as 'young' or 'mature', as they may mask discriminatory intentions.
- Place job adverts to ensure they reach different age groups.
- Advertise vacancies openly; do not simply rely on internal recruitment, or word of mouth.
2. Application forms
- Avoid asking for age or date of birth on application forms; instead ask for this information on the equal opportunities information form, along with other monitoring information.
3. Review interview practices
- Avoid asking age-related questions at interview or ones which assume that length of experience equates to a level of skill.
- Ensure that interviewers do not have any age-related prejudices and consider using employees of different ages in the recruitment process
4. Extend harassment policies
Harassment policies should be extended to cover age, including stereotypical jokes.
5. Review promotion
- Have a promotion or career development policy that emphasises that age is no barrier.
- Avoid minimum or maximum cut off ages for promotion.
- Promote on ability and performance, not length of service.
- Apply selection criteria fairly and consistently across the age spectrum.
- Monitor promotion processes to ensure fairness for employees of all ages.
6. Review pay and benefits
- Scrutinise pay and benefits policies - are they based on age in some way?
- Many benefits only become available after a minimum period of service, while others increase with length of service. If these are within the first five years of employment they will be exempted, otherwise can they be justified?
7. Training
- Avoid assuming older workers will be unwilling to learn or that training them will be too costly to prove economical. Instead, provide training across the age spectrum.
- Talk to older workers about the benefits of taking up learning opportunities and use those who have benefited as role models to encourage others.
- Be flexible with training methods and times as everyone's learning style is different.
8. Retirement
- Put in place procedures to deal with retirement or dismissals, ensuring that processes exist to notify employees of the intended retirement date and to deal with subsequent requests.
- Review all contractual, customary or 'normal' retirement ages. If under 65, can they be objectively justified or should they be changed? What procedure will need to be followed to change them lawfully?
- Consider introducing a flexible retirement policy to provide people with alternatives to stopping work at the normal retirement age, such as reduced hours or job sharing.
- Always ensure that basic policies are in place to deal with poor performance and health issues. Do not use retirement as an easy alternative.
9. Redundancy
- Any contractual redundancy schemes that calculate payments on age and service will need to be reviewed.
- Always base decisions for making employees redundant on the needs of the business: do not use age as a criterion.
- Ensure that incentives for voluntary redundancy are not age-biased and consider the merits of offering it to staff of all ages
10. Know your employees
The legislation will not contain any obligation to collect information on the age profile of the workforce, but doing this will make it easier for employers to check whether age discrimination is occurring, take the necessary steps to address it and successfully defend claims.
The age regulations will have a significant impact. The best advice is to act now.
- Alison Love is a partner and head of employment group, Hugh James Solicitors, Tel: 02920 391075, E-mail: alison.love@hughjames.com
DISCRIMINATION STATISTICS
Statistics from the British Council's Human Rights Network website (now decommissioned) state that:
- 30% of 18-24 year olds and 25% of non-working people aged over 50 have reportedly been the victims of workplace age discrimination
- 48% of registered unemployed people aged over 50 have reported suffering age discrimination in the workplace
- working people at each end of the age spectrum have reported significant levels of age discrimination in the workplace
- in the UK, 19m people are aged over 50 (40% of the adult population)
- by 2020 the number of 20-29 year olds will have decreased by 20%, while the number of 50-64 year olds will have risen by 26%.
IMPACT OF AGE REGULATIONS
A poll of major UK employers carried out by the Employers Forum on Age (EFA) earlier this year found that 40% expect the forthcoming age legislation to have a greater impact than sex and race discrimination laws. The research also found that the majority of the employers surveyed - who together employ almost two million people - believe age discrimination law will have more of an impact than any other form of discrimination law.
Sam Mercer, director of EFA, commented: "Age regulations have been on the horizon for a number of years, and employers need to wake up to the fact they are nearly here. Any employer who hasn't got age equality as a priority is going to be in trouble. The employers we surveyed know what they are talking about, because they have been preparing for years for this crucial change in employment law. If they think age laws will have a big impact we should listen to them."
The research also revealed that:
- half of UK employers think age legislation will have a greater impact than race and disability legislation, and almost 90% believe the regulations will have a greater impact than sexual orientation legislation and religion and belief
- 40% of UK employers believe more than half of employment tribunals cases will contain some element of age discrimination after the new regulations come into force in October
- three quarters of those surveyed believe that people of all ages will benefit from the new age discrimination laws. 44% think employment lawyers will be the big winners.
Despite Government efforts, retirement still appears to be of greatest concern to employers, with 60% believing the new age laws will make the process of employee retirement more difficult. For people wanting to work for longer, the good news is that 80% of employers believe the age laws will increase opportunities for older workers.
GOVERNMENT PENSION REFORMS
In May, the UK government announced reforms that will increase the age for receiving a state pension and restore the link between pensions and earnings. The state pension age will rise from 65 to 66 by the mid 2020s and gradually increase to 68 by 2050. The link to earnings will not be introduced until at least 2012.
The announcement followed the second report of the Pensions Commission, the so-called Turner Report, which concluded that the current voluntary privately funded pensions system, combined with the current state system, will not be fit for purpose in the future. It proposed a new settlement for UK pension policy in the 21st century which combines two elements:
- a new policy for earnings-related provision, which recognises the inherent inadequacy of a purely voluntary approach, but which stops short of full compulsion, relying instead on the automatic enrolment of employees into either a new National Pensions Savings System or into existing company pension schemes, but with the right to opt-out, and with a modest level of compulsion on employers to make matching contributions.
- a reform of state pension provision to make it simpler to understand and less means-tested than it would be if current indexation arrangements continued. It will provide clear incentives and a easily-understood base on which individuals can build additional private provision, and it is desirable in order to address the existing problems with the state pension system.
