UK: Age Discrimination - Preparing for the Change

Last Updated: 25 May 2005
Article by James Libson

As you may be aware, new age discrimination laws are coming into force in October 2006. Draft regulations have not yet been published, but it is believed that the new legislation will have wide ranging consequences for employment practices and is likely to force a change in the culture of many workplaces. Employers are advised to start looking at their policies at an early stage to ensure that they will not fall foul of the law when it comes into force. This article looks at the areas most likely to be affected by the new legislation and outlines suggestions for employers on how to avoid the pitfalls.

The proposals in summary

It is proposed that the legislation outlawing age discrimination in employment (which will include young as well as old age) will be consistent with other discrimination legislation. For example, the position on indirect discrimination, harassment and victimisation will mirror that contained in laws prohibiting discrimination on the grounds of sexual orientation and religion. However, it is proposed that the position on direct discrimination on the grounds of an individual's actual (or perceived) age will differ in that an employer may be able to justify the action, provided it can be shown that the action is appropriate and necessary in the circumstances. Theoretically, this will give employers some flexibility, but the circumstances when you can let age be a factor in your decision-making are likely to be very restrictive, and so it will only be in exceptional circumstances that an employer will be able to rely on the defence of justification.

In line with other types of discrimination, there will be no length of service requirement in order for an employee to bring a claim, and damages will be uncapped.

Retirement age

One important aspect of the implementation of the age discrimination legislation is the treatment of mandatory retirement ages. Currently, employers are free to set the age at which their employees are required to retire without any need to justify their choice. In some companies, retirement ages can be as low as 55 or even younger. Whereas an absolute requirement to retire at a certain age would constitute discrimination on the basis of age, the Government is not proposing an outright removal of mandatory retirement ages and has been consulting extensively on how to approach this issue under the new law. In December 2004, the Government announced its proposal that there should be a default retirement age of 65, with a right for employees to request working beyond this age (a request which employers will have a duty to consider). Employers will only be able to set a retirement age for all or part of their workforce below 65 if they can objectively justify it. Employers will have to show that it was both appropriate and necessary to do so and will be unlikely to be able to rely on this defence if the rationale behind the setting of a mandatory retirement age can be achieved by alternative means.

How will employers be affected?

Age discrimination may well be the most challenging form of discrimination to eliminate, as it is well entrenched, not only in workplace culture but also in legislation. For example, age is a factor when calculating redundancy payments and there is an upper age limit of 65 in relation to the right to bring unfair dismissal claims. It is expected that these age-related aspects of the current legislation will be removed.

As regards employers' internal workplace policies, it is not unusual for length of service to be a factor in a range of policies, from promotion and pay, through to holiday entitlement. Such policies will be indirectly discriminatory against young employees and will be held to be unlawful, unless the employer can objectively justify them. It is expected that there will be a limited exemption in relation to awarding pay rises based on experience but it remains to be seen how this exemption will apply in practice.

It is also not unusual for employers to "phase out" older employees, including before retirement age, whether by individual dismissals and early retirement or through redundancy selection. At the moment, the employer needs to ensure that any such dismissals are fair, but this practice is not otherwise unlawful. However, under the new law, this will clearly constitute discrimination.

Other areas where the age discrimination laws will impact include recruitment, where number of years' experience is often cited as a requirement for the job and where many employers deliberately exclude applicants below and/or above a certain age. Regarding the former requirement, it is likely that an employer will need to show objective justification for requiring certain years of experience in relation to the particular job in order not to discriminate against young applicants. However, an employer is unlikely to be able to justify a policy of not recruiting certain age groups.

Age discrimination will provide legal recourse for a wide range of employees who may not currently have a remedy under any other heads of discrimination, be they young, old or middle aged, and we may well see a surge of claims in this area once the legislation is in force.

Planning ahead?

Although age discrimination will not become law until October next year, employers should consider ways in which they can ensure compliance as early as possible. This includes starting to raise staff and management awareness to avoid successful claims when the legislation comes into force. For example, a harassment claim could be based on conduct, however innocently intended, like teasing and making jokes about somebody's age or sending a birthday card which makes a joke out of the recipient's increasing years. Incidents occurring now may be referred to in future litigation as evidence of a discriminatory work culture even though the law is not currently in force. Employers are also well advised to start reviewing their policies now to ensure that they do not contain references to age, whether direct or indirect, that may be ruled unlawful. This will include removing details of an applicant's age on application forms and other recruitment material.

Because there has not been the same taboo in relation to age discrimination as other types of discrimination, it is likely that it will be more difficult to eradicate. This is why it is particularly important that employers start considering what steps they can take to change their policies and workplace culture now, to avoid facing an uphill struggle later.

IMPORTANT: This update is only intended as a general statement of the new law and no action should be taken in reliance on it without specific legal advice.

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