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Dawn of a new age

Open-access content 27th August 2008

New regulations that outlaw age-related discrimination in the workplace come into force next year.  Sarah Lamont reports on what firms can do to make sure they comply with the new rules

 

26 August 2005

 

The Department of Trade and Industry has published a consultation paper and a draft set of regulations on its proposals to outlaw age discrimination. This will implement the age discrimination provisions of the EC Equal Treatment Directive. Consultation runs until 17 October and the final version of the regulations will be brought into force on 1 October next year.

 

The draft regulations protect job applicants, contract workers and self-employed people engaged under a contract personally to do any work, as well as employees. They will have an impact in a wide range of areas, including recruitment, pay and benefits, training, promotion, dismissal and retirement.

 

Employers need to start thinking now about the practical implications. In most situations, it will be unlawful for employers to treat workers less favourably on the grounds of age. It may be justified only if it pursues a legitimate aim and is appropriate and necessary in the particular circumstances but employers will have to produce evidence if challenged; mere assertions will not be enough.

 

The draft regulations include a list of cases in which direct age discrimination may be justified. These include fixing a minimum age to qualify for employment-linked advantages in order to retain older people, and a maximum age for recruitment or promotion based on training requirements or the need for an individual to complete a reasonable period of employment before retirement. The consultation document lists further examples, including health and safety, employment planning and encouraging and rewarding loyalty.

 

Indirect age discrimination is also prohibited by the draft regulations. This occurs when an apparently neutral practice puts an age group at a disadvantage and cannot be objectively justified. The consultation document gives the example of a business that requires job applicants to have held a driving licence for five years. Since this criterion is more difficult for younger applicants to meet, the employer would need to show objective justification.

 

The draft regulations allow the use of length of service as a criterion in relation to pay and benefits if it is meant to reflect experience, reward loyalty or increase motivation resulting in a business benefit. In these cases, there is no need to show objective justification.

 

Two further exemptions apply to service-related benefits. Any length of service requirement of five years or less is permitted, provided it is applied consistently; and any length of service requirement that mirrors a similar requirement applicable to a statutory benefit is permitted. This allows the use of length of service as a criterion in the context of enhanced maternity rights and contractual redundancy schemes.

 

The draft regulations contain specific provisions designed to outlaw age-related harassment, victimisation and post-employment discrimination (eg providing an unfavourable reference to a former employee).

 

Retirement ages have proved to be a contentious issue. The draft regulations fix a national default retirement age of 65, and the adoption of a lower retirement age will be unlawful unless it can be objectively justified. The government will review the operation of the default retirement age in 2011.

 

Employers that adopt a compulsory retirement age - whether 65 or otherwise - will have a duty to consider requests to work beyond that age. This is modelled on the existing right of employees to request flexible working. It involves notifying the employee of his intended retirement date not more than 12 months and not less than six months in advance, and informing him of the right to request to work beyond this date. Retirement will not constitute unfair dismissal if it is at or after the default retirement age of 65 (or at the employer's own lower retirement age, if this is objectively justified) and the employer has followed the "duty to consider" procedure.

 

There are changes in the pipeline in relation to unfair dismissal and statutory redundancy pay. Currently, employees cannot claim unfair dismissal once they reach either 65 or their normal retirement age, and there is a cut-off at the age of 65 in relation to the right to statutory redundancy payments. The draft regulations will abolish these upper age limits.

 

The government also proposes to scrap the "tapering provisions" whereby unfair dismissal awards and statutory redundancy payments are reduced by one-twelfth for every month beyond the employee's 64th birthday. In relation to the calculation of statutory redundancy payments, years of service under the age of 18 will no longer be discounted.

 

Occupational pensions are largely unaffected by the draft regulations. Accordingly, pension schemes can still fix ages for admission or entitlement to retirement benefits, and the use of age criteria in actuarial calculations will continue to be permitted.

 

Facilities management providers need to review their employment practices now in order to identify where changes need to be made to. Areas to consider include: recruitment - ensure that decisions are based on the skills required for the job and not on the candidate's age; training - opportunities should be available to everyone, regardless of their age; promotion and development - criteria for promotion should be based on performance and experience rather than age or length of service; pay and benefits - consider whether provisions that allow the use of length of service as a criterion apply; termination - bear in mind that the use of length of service as a criterion for redundancy may indirectly discriminate against younger workers unless objectively justified.

 

Sarah Lamont is a partner at Bevan Brittan LLP, a BIFM corporate member

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