The Employment Equality (Age) Regulations 2006 came into force on 1 October 2006. Below is a summary of their effect. Acas has issued formal guidance on the impact of the regulations (see www.acas.org.uk).
In addition, the "Resources" area on the right of this page contains a downloadable pdf offering separate, specific advice on "Avoiding age discrimination in job adverts and recruitment".
THE LAW
Discrimination
• What will constitute discrimination?
Both direct and indirect discrimination will be unlawful.
Direct discrimination occurs where an employer unjustifiably treats an individual less favourably on the grounds of age than it treats others (for example, not providing medical insurance to employees aged 50 or older).
Indirect discrimination occurs where an employer’s policy or procedure unjustifiably puts individuals in a certain age group at a disadvantage (for example, requiring all new employees to take a health and fitness test, where people of certain ages would be less likely to pass than other groups).
Harassment and victimisation are also unlawful. Harassment is unwanted conduct related to age that has the purpose or effect of violating an individual’s dignity or that creates an intimidating, hostile, degrading, humiliating or offensive environment. Victimisation occurs where an employee suffers adverse treatment from an employer in response to an action taken or allegation made under the age discrimination legislation.
Claims
• Who will be covered?
The regulations apply to all employees (fixed and indefinite term), job applicants, contract workers, office holders (including company directors and members of the police force etc), partners, secondees and the self-employed (if they provide services personally).
Claims must generally be brought within three months of the alleged discriminatory act. A questionnaire, similar to those used in other discrimination legislation, is available. An employee will only need to prove facts from which a tribunal could conclude there has been discrimination. It is then up to the employer to prove discrimination has not taken place or to justify it.
Remedies
Compensation can be awarded for financial loss (the employee is required to mitigate such loss) and injury to feelings. A tribunal can also award aggravated damages if it finds a link between an employer’s conduct or motive and the employee’s injured feelings. Compensation is uncapped.
Defences
• Who will be liable?
An employer will be liable for the discriminatory acts of its employees unless it takes reasonable steps to prevent them. An employee who commits a discriminatory act will be personally liable.
An employer may be able to defend both direct and indirect discrimination claims if it can show the discrimination is a “proportionate means of achieving a legitimate aim” (objective justification). A “legitimate aim” must correspond with a real need of an employer, and could include business efficiency. A “proportionate means of achieving” means the importance of pursuing a legitimate aim must be weighed against its discriminatory effect. In contrast with the draft regulations, the final version does not give examples of what might be legitimate aims. As with other discrimination legislation, this will be for employers (and employment tribunals) to decide on a case-by-case basis
If a legitimate aim can be achieved by a less discriminatory method, this should be used.
An employer must produce evidence of objective justification – assertions alone will not be sufficient. It will not be acceptable to discriminate because it is more expensive not to.
Unfair dismissal after 65
Most employees with one year’s qualifying service have the right not to be unfairly dismissed under the Employment Rights Act 1996. Until now, this right has not applied to employees who have reached normal retirement age for their job or, if there is no normal retirement age, age 65.
The age limits on bringing unfair dismissal and redundancy claims will be removed under the regulations.
Age bands for calculating statutory redundancy payments and basic awards for unfair dismissal will remain unchanged, using a multiplier based on a number of weeks pay, ranging from half a week for younger workers to one and a half weeks for older workers. This is designed to reflect the different position of younger and older workers in the labour market.
Pensions
Discrimination or harassment by trustees or managers of an occupational pension scheme against a member or prospective members of a scheme will be unlawful. But certain practices are exempted, including:
• the fixing of ages for admission;
• the use of a normal retirement age;
• the use of age criteria in actuarial calculations;
• setting pension benefit levels by reference to length of service.
The government has stated that it “expects pension schemes to be able to operate largely as they do now”. To give pension schemes more time to adjust their rules and procedures, the pensions parts of the regulations are still being reviewed and will not come into force until 1 December 2006.
Retirement
Under the regulations the default retirement age is 65. If an organisation’s normal retirement age is below 65, it will need to be objectively justified. A retirement age for partners or company directors will be unlawful unless it can be objectively justified.
Employees will have the right to be informed of their expected retirement date and of their right to request to work longer. This must be done at least six months, but not more than 12 months, in advance of a planned retirement.
Employee requests to stay on must be considered using a detailed “duty-to-consider” procedure laid down in the regulations. Not following this procedure could result in compensation of up to eight weeks’ pay or an automatically unfair dismissal, depending on the extent of the failure.
If, on notification, an employee agrees to retire there is no need to follow the procedure, and it will not necessarily be used routinely for every dismissal of an employee over the retirement age. It is important first to establish accurately what the principal reason for dismissal is. Employees may be redundant, for example, in which case they will be entitled to redundancy pay at age 65 or above as they would at any other age. If the retirement procedure is used to dismiss an employee, and the contract of employment terminates on the intended date of retirement, the reason for dismissal will be retirement and the dismissal will be fair.
Pay and benefits
Statutory provisions for the national minimum wage currently contain age bands for younger employees. This will continue, so ensure that remuneration is uniform within the set age bands (for example, a 19-year-old should be paid the same as a 20-year-old doing the same job).
• Length of service exemption
The regulations provide that using length of service to calculate an employment benefit (pay or non-pay) will be lawful if a qualification period of five years or less is used. The employer can choose whether to calculate the five years by reference to total length of service, or length of service in a role at or above a particular level. If a qualification period of more than five years is used, to be lawful it must reasonably appear to the employer that adopting the length of service criterion fulfils a business need of the undertaking (such as encouraging loyalty or motivation).
ACTION CHECKLIST
Employers and vocational training providers should continue to monitor employment practices and procedures to ensure they comply with the regulations. Potential changes may need to be discussed with employees, their representatives or trade unions.
Record keeping
If a policy could be discriminatory, keep a written statement on file, setting out why it is objectively justified. Also keep a note on why the application of the policy to a particular individual is objectively justified.
It should be easier to see whether age discrimination is occurring if a record is kept of a workforce’s age profile and turnover rate. It will also be possible to see whether a length of service criterion used in calculating an employment benefit has a real business benefit.
Policies
Check all employment contracts, rules and handbooks and amend any provisions likely to be discriminatory. Make clear to managers and other employees that harassment on grounds of age will not be tolerated, and consider whether training in these policies is necessary.
Recruitment
Take care when advertising job vacancies. Issues to consider include:
• where advertisements are placed (this could effectively exclude a particular age group);
• the wording used in advertisements (for example, do they give the impression that applicants from a particular age group will be favoured by asking for a “mature” or “young and dynamic” person?);
• qualification requirements (these could have a discriminatory effect – for example, asking for media studies from older people).
Any discriminatory practices will need to be objectively justified.
Ensure those involved in a selection procedure do not bring age-related prejudices to it and that recruitment agencies are not asked to recruit specifically on the basis of someone’s age. Consider moving age-related questions in application forms to a diversity monitoring form and keeping these separate from those used to make recruitment decisions.
Management decisions on recruitment are likely to come under greater scrutiny in the future, so more formal job specifications, identifying particular skills and competences, may need to be adopted in order to avoid litigation. This may also mean considering more applicants during selection.
Training
Take care that older workers are not excluded from training because of their age. Although the rate of return on training is perceived to fall with age, while the cost of the employees’ time rises and length of their working life declines, this may not always be the case. It is unlikely to be enough to objectively justify discrimination.
Promotion
All staff should be given equal consideration for promotion. Promotion decisions need to be transparent and untainted by unjustified age discrimination.
The regulations provide that a requirement for a certain length of experience for promotion (or recruitment) must be objectively justified. If such a requirement is essential for carrying out the role properly, it should be possible to show objective justification.
Benefits
Any service-related benefits should be checked to see if they fall within an exemption or are justifiable. If they don’t, consider either reducing the length of service criterion to five years or changing their qualification criteria to something other than length of service (for example, performance).
Benefits that could be considered discriminatory may need to be removed altogether, but bear in mind that this may give rise to grievances where the sole reason for their removal is to avoid litigation. It may be advisable to consider comparable alternative benefits that are less likely to be discriminatory, explaining clearly to employees the reason for the change.
About the authors
Kathleen Healy is a partner in the employment, pensions and benefits group at Freshfields Bruckhaus Deringer. For more information contact kathleen.healy@freshfields.com