New regulations will come into force in October 2006 prohibiting discrimination on grounds of age, implementing the EC Employment Framework Directive. Currently the regulations are still in their draft form and are expected to be finalised in January 2006. All aspects of the employment relationship will be affected, including recruitment, promotion, benefits, retirement, termination, post employment and some aspects of pensions.
Unlike the United States, where the federal age discrimination law protects only employees aged 40 and over, all age groups will be protected by the legislation in the UK—both young and old.
The regulations will be wide ranging and will affect many different areas of the employment relationship:
Employers can still have a retirement age for their employees, but this must not be below 65 (unless a lower age is justified).
Employers will be required to inform employees in writing and at least six months in advance of their intended retirement date.
Employers will be required to consider an employee’s request to continue working beyond retirement.
Currently, employees above the normal retirement age cannot claim unfair dismissal and are not entitled to a redundancy payment. However, this upper age limit is to be removed. Older workers will therefore have the same rights to claim unfair dismissal or receive a redundancy payment as younger workers.
The regulations include provisions relating to service-related benefits and occupational pensions.
The regulations outline two forms of discrimination: direct and indirect.
Where a person’s actual or perceived age is used as a reason for different treatment in a comparable situation and there is no objective justification for doing so, this will amount to unlawful discrimination. The fact that direct discrimination is capable of being justified differentiates it from other forms of discrimination, such as sex and race, which can never be justified. For example, advertising for a "young and dynamic professional" will be unlawful unless it is objectively justifiable.
Indirect age discrimination occurs where an apparently neutral practice disadvantages persons of a certain age group, even if this effect is inadvertent. For example, advertising for "recent graduates" may indirectly discriminate against an older age group. Again, this will be unlawful unless it can be objectively justified.
The objective test of justification is the same for both direct and indirect discrimination. The treatment must be a proportionate means of achieving a legitimate aim. There are two elements to this definition—legitimate aim and proportionality.
To be legitimate, the aim must correspond with a real need of the employer. An example of a legitimate aim would be employees’ and clients’ health, safety and welfare, or the need to encourage and reward loyalty amongst staff.
When considering whether the means of pursuing the legitimate aim are proportionate, the employer must be able to show that the practice contributes to the pursuit of the legitimate aim (ie, the use of an age-related practice to encourage loyalty must actually do so) and the importance of the legitimate aim being pursued should be weighed against its discriminatory effects.
- The draft regulations contain examples of treatment which may satisfy the objective justification test. These are:
- The setting of requirements as to age in order to ensure the protection or promote the vocational integration of people in a particular age group.
- The fixing of a minimum age to qualify for certain advantages linked to employment or occupation in order to recruit or retain older people.
- The fixing of a maximum age for recruitment or promotion which is based on the training requirements of the post in question or the need for a reasonable period in the post before retirement.
The regulations will prohibit harassment on the grounds of age. An individual subjects another to such harassment where, on grounds of age, an employee engages in unwanted conduct which:
- violates another employee’s dignity, or
- creates an intimidating, hostile, degrading or offensive environment.
The conduct can be unintentional and can never be justified. The test of whether harassment has taken place is both objective and subjective. It is a test of what is reasonable with awareness of the complainant’s subjective perception.
An employer can be held liable for employees’ actions unless he can show that he took such steps "as were reasonably practicable to prevent the employee from doing that act or doing in the course of his employment acts of that description". However, case law dealing with other forms of discrimination, such as age and sex which also have this type of "defence" for an employer, has shown that it is, in fact, very hard for employers to meet the standard required to show that sufficient steps have been taken to rely on this defence.
Victimisation on grounds of age will amount to discrimination under the legislation.
Under the draft regulations an employee can bring a claim for victimisation on the grounds of age if the employee:
- has made or intends to make an allegation/complaint with regards to age discrimination, in good faith, and
- is treated less favourably as a result.
If the employee makes allegations known to be false, the employee will not be protected.
Before the draft regulations were published, there was much debate about whether employers would be permitted under the regulations to set a normal retirement date at all. To the relief of many businesses, the regulations will permit employees to set a normal retirement age, although this may not be below the age of 65 (unless a lower age can be justified, which will be very difficult to do).
- The regulations will introduce a new "duty to consider procedure" which must be followed on retirement:
- The employer must, 6 to 12 months before retirement, inform the employee of the date of intended retirement and of the right to request to work after the retirement age.
- Between one year and six weeks before the intended retirement date the employee can make a request not to be retired.
- The employer must then either agree to the request or meet with the employee to discuss it. The employee must be informed of the decision within two weeks. The employer does not need to give a reason for their decision.
- The employee can appeal within two weeks of receiving the employer’s decision.
Many employers provide benefits which are related to the employee’s length of service. Requiring a certain length of service before the employer gives or increases a benefit is potentially indirectly discriminatory on grounds of age, as (generally) older workers are likely to have longer service than younger workers. However, it was generally thought that service-related benefits should be retained and, therefore, the draft regulations contain specific and general exemptions permitting service-related benefits in certain circumstances. These are wide and will mean that most service-related benefits can be continued.
There are two specific exemptions. Benefits that are permitted are those which are:
- subject to a service requirement of five years or less, or
- that mirror a statutory benefit.
The regulations also include a general exemption permitting a service-related benefit if:
- the length of service is the criteria by reference to which the benefit is awarded, and
- it reasonably appears that there will be an advantage to the employer from rewarding loyalty, encouraging motivation or recognising the experience of workers by awarding benefits on the length of service, and
- the benefit is awarded to all of the employer’s workers who meet the length of service criteria and whose situation is similar.
Recent surveys conducted among the business community have shown that most employers think that they will not be affected by the regulations. It looks like many will be taken by surprise, as given the wide-ranging nature of the regulations, few employers will escape its impact. Employers should start now to consider their policies, practices, and terms and conditions to determine what the impact of the legislation will be on their business. Employers should also be encouraged to start management training before the regulations come into force to avoid claims which could arise from a lack of understanding of the new protection the legislation gives to employees. Given the experience of the United States and the amount of claims arising out of age discrimination legislation, employers will need to be properly prepared.