Legal documents for business

Age Discrimination Rules: Are You Ready For The Change?

25 July 2006

This article is provided courtesy of Shadbolts Newsletter service.

UK Legislation outlawing age discrimination is due to come into force on 1 October 2006. The Regulations have not been issued in the final form but it is not expected there will be much change to the draft Regulations issued in July 2005.

The legislation will be far reaching in impact protecting both young and old and covering all stages of employment and vocational training including recruitment, promotion, pay and benefits and action taken post dismissal. Job applicants, employees, the self-employed and contract workers will all be protected.

We anticipate that unsuccessful candidates for recruitment or promotion will not hesitate to bring claims. Employers should therefore act now in order to be prepared to deal with the consequences.

The 10 key features of the Regulations are as follows:

Discrimination

The definition of discrimination will mirror the definitions used in other discrimination legislation.
Accordingly, an employer will discriminate against another where he treats that person less favourably on the grounds of that person’s age. A job advertisement stipulating an age range would be discriminatory.

Indirect discrimination will occur where an employer applies a requirement, condition or practice generally which has an adverse disproportionate impact on a particular group or person. Advertising for students to fill bar positions, may therefore amount to indirect discrimination on the basis that fewer older people are students.

As under other discrimination legislation, there will be protection against harassment on the grounds of age and victimisation of individuals who have brought complaints under the Regulations.

Justification

Unique to age discrimination legislation, both direct and indirect discrimination, may be justified. The Employer will need to establish that the treatment is necessary to achieve a legitimate business aim – it will need to show that the importance of the aim outweighs any discriminatory effects of the treatment.

Exemptions

It will not be unlawful to discriminate where characteristics relating to age are a genuine occupational requirement and it is proportionate to apply the requirement (an actor is usually the example given in this category). Furthermore there will be a narrow exemption allowing employers to take positive action where it appears to them that a particular age group is under represented.

Pay and Benefits

Whilst additional benefits based on length of service would ordinarily amount to indirect age discrimination, the Government is keen not to discourage the practice of rewarding loyalty on the basis of enhanced benefits. Accordingly, there will be two levels of exemption as follows:

· Automatic exemptions for:
(i) provision of benefits based on length of service of 5 years or less; and
(ii) the provision of benefits mirroring statutory benefits (for example contractual redundancy payments).

· General Exemption
This allows employers to take into account service of 5 years or more in awarding benefits where it reasonably appears to the employer that there will be an advantage in rewarding the loyalty or recognising the experience of the employee (there is currently no guidance on what would be acceptable in this category – DTI Guidance will be issued once the Regulations are in their final form which should clarify this and other issues).

Retirement

After extensive debate, there will be a standard default retirement age of 65 to be reviewed in 2011. This means that where a dismissal is genuinely on the grounds of retirement, there will be no age discrimination where an individual is retired at the age of 65 or over. Where an employer wishes to retire an employee below the age of 65, this will be subject to the strict test of objective justification.

Duty to Consider Work after Retirement Age

The Regulations include a procedure designed to encourage employers andemployees to discuss working beyond retirement age modelled on the right to request flexible working (the “statutory procedure”). The employer must seriously consider any request made under although it may reject any request without giving reasons.

Unfair Dismissal

The upper age limit on bringing a claim for unfair dismissal will be removed.

Retirement will be a potentially fair reason for dismissal where:
· It is a genuine retirement on or after age 65 (or lower retirement age if objectively justified) and
· The employer has complied with the statutory procedure

A dismissal will be automatically unfair where the employer fails to comply with the statutory procedure.

Pensions

The EU Directive permits member states to take advantage of exemptions in relation to age based requirements in pension schemes. It will not therefore be unlawful for employers to operate pension schemes with age related rules. Permanent health insurance schemes and the like are covered by a similar exemption.

Redundancy

The upper age limit on claiming a redundancy payment will disappear and there will be some changes to the age based provisions relating to calculations.

Enforcement

Enforcement of the Regulations will be by complaint to the Employment Tribunal. The Employment Tribunal will be able to make declarations and award unlimited compensation as with other discrimination claims.

Given the potential for claims of both discrimination and unfair dismissal, it is imperative that employers focus on age discrimination now by ensuring those concerned are adequately trained and by reviewing procedures, employment contracts and Handbooks.

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