Discrimination - age

Introduction

Employers who discriminate on grounds of age are breaking the law. The Employment Equality (Age) Regulations 2006, which took effect on 1 October 2006, apply to all UK employers and outlaw discrimination against workers (ie not just employees, but also agency workers, some self-employed contractors, job applicants, office holders, people undertaking or applying for employment-related training or further or higher education courses, and those who are members or who apply to join trade unions or professional bodies) in relation to either their actual or their perceived age, for all aspects of employment, including:

• the recruitment process (eg advertising, the interviewing process, the terms of any offer of employment, refusing employment)
• terms and conditions of employment
• opportunities for promotion, training, transfers or other benefits
• dismissal or any other detrimental treatment in employment (including redundancy).

Similar to other discrimination legislation, the regulations prohibit direct and indirect discrimination, harassment and victimisation, however the provision of goods and services is not covered. Also unlike other discrimination legislation, employers may justify different treatment on grounds of age - but only where they can show that this fulfils a legitimate aim and the particular circumstances make this appropriate and necessary.

Many people believed that the age legislation would have a greater impact than either sex or race discrimination laws - unsurprisingly perhaps since we are all potentially affected by it. However, it has now been in force since October 2006, and the Employers Forum on Age found that 59 per cent of the employees it surveyed claimed to have witnessed some form of ageist behaviour in the workplace during the past year. They reported:

• 30 per cent of respondents were aware of an older person getting paid more than a younger person for doing the same job
• 31 per cent had witnessed people being managed differently depending on their age
• 27 per cent were aware of employers hiring people of a similar age to the rest of the workforce to ensure they fitted in.

739 age discrimination claims were made between 1 October 2006 and 31 March 2007: whilst this may not seem very many, it is almost the same as the combined number of sexual orientation and religious discrimination claims filed in the entire first year after they were introduced.

The first successful case of discrimination on the grounds of being too young was that of Megan Thomas, aged 20, who was dismissed from her job as a membership secretary at the Eight Member club in London after her six-month probation period. The employer denied discrimination, claimed that the reason for the dismissal was because she had made some mistakes. They pointed out that many waiters and waitresses at the club were younger than she was, but lost their case. The award is expected to be about £2000 - a relatively low amount because Megan Thomas found another, higher paid, job within four days of being dismissed, so was only compensated for injury to feelings and unpaid notice.

Background facts

• Life expectancy in the UK has increased by more than ten years since 1950. By 2021, 23% of the population will be aged over 65.
• The overall population of the UK is ageing, and the relative proportion of those aged over 65 is increasing. Demographic changes mean that the labour market will soon contain more people aged over 40 than under 40: by 2010 almost 40% of the UK workforce will be aged 45 or over.
• By 2020, young people will comprise only 11 per cent of the workforce, compared with 16 per cent today - a drop of almost one million.
• The proportion of people aged over 55 still in work has fallen dramatically since the 1960s. Only around 30% of men aged 60-64 are still in work.
• However, around 1.3 million people choose to work beyond state pension age (a rise of 8.8% in the past year and an increase of more than 55% over the past 15 years). The Government wishes to encourage this further, to maintain the current ratio of workers to non-workers. A survey by Aon Consulting discovered that three-quarters (78%) of employees now anticipate working beyond the age of 65. Just a quarter of the 1,204 respondents in their survey thought they would do this because they wanted to, whereas over half (53%) believed it would be necessary to increase their pension.
• The CIPD estimate that age discrimination costs the economy between £19 and £31 billion a year in lost output. To be successful in an increasingly competitive market place, organisations need to attract and retain valuable employees and develop the talents of all their employees.
• The CIPD and the Institute of Chartered Management also report that age discrimination persists in many organisations - in a survey undertaken jointly by both professional bodies, six out of ten respondents said that they had been personally disadvantaged at work because of their age, and 22% admitted that age had an impact on their own recruitment decisions. The Department of Work and Pensions also recently reported that around one in four people aged between 50-69 experienced age discrimination when working or seeking work.

Age discrimination does not just apply to older workers - it can affect anyone, but other groups who commonly suffer are women returners and workers who are discriminated against because it is felt that they are too young.

The business case for removing age discrimination

The business case for removing discrimination on grounds of age is similar to that for other types of discrimination: ie that employers who limit their choices by imposing unnecessary and irrelevant restrictions on who they recruit, train or promote are less likely to find and retain the best person for the job.

• Age is not a genuine employment criterion.
• It is a poor predictor of performance.
• It is misleading to equate physical and mental ability with age.
• Differences in absenteeism between age groups are slight.

Ageism lowers morale, reduces the pool of candidates available to do the job, and makes bad business sense.

Scope of the Regulations

The new regulations cover "workers" - ie not just employees. They also protect job applicants, office holders, partners, people undertaking or applying for employment-related training or further or higher education courses, members and applicants to trade unions and professional bodies, agency workers, some self-employed individuals (in relation to those that hire them), and ex-employees. Unpaid volunteers are not covered by the legislation, unless the unpaid volunteering is part of a training course - in which case the volunteer is covered (eg unpaid teaching as part of a teacher training course).

Comparators

The comparison is made between persons of the claimant's "age group" and those "not of the same age group". There is no definition of what age group may be used, which will depend on the circumstances and issue in question - however it seems likely that a broad definition will be used.

Indirect and direct discrimination and harassment

As with other forms of discrimination, both indirect and direct discrimination and harassment are covered.

• Direct discrimination is treating someone less favourably because of their age or because of the age they appear to be.
• Indirect age discrimination would include having a policy or practice which puts people of a certain age at a disadvantage, compared with other people.
• All harassment or victimisation on grounds of age of people of any age, young or old, is covered. Harassment occurs when there is unwanted conduct with the purpose or effect of violating the dignity of a person, or creating an intimidating, hostile, degrading, humiliating or offensive environment.

Justification and "Genuine Occupational Requirements"

Unlike sex and race discrimination, employers are able to treat people differently on grounds of age where this can both be objectively justified (ie a proportionate means of achieving a legitimate aim) and where it is appropriate and necessary - this applies to both direct and indirect discrimination (but not to harassment or victimisation which are always unlawful and cannot be justified). This will not necessarily be easy - and sufficient supporting evidence will be needed. The government has indicated that legitimate aims may include the following, but there is no list in the Regulations themselves, only examples:

• catering for health, welfare or safety
• facilitating employment planning (eg where an employer has a number of people approaching retirement age at the same time)
• meeting particular training requirements for a post (eg where the post requires high levels of health and fitness or concentration)
• encouraging and rewarding staff loyalty
• the need for a reasonable period of employment before retirement, particularly where the job requires significant training.

Employers may decline to recruit someone who is older than the employer's normal retirement age (if it is greater than age 65), or, if there is no NRA, age 65. Regulation 7 also enables an employer to decline to recruit someone who, within 6 months following the date of his/her job application, would be older than this age.

An employer can also discriminate on grounds of age if this is required by law, eg working in a bar, or needing a road haulage licence (which has an age requirement).

An employer can have a "Genuine Occupational Requirement" if there is a genuine need for an employee to have a characteristic related to a certain age. The example usually given is that of an actor playing the role of a person of a particular age - it is difficult to think of any other examples where this exemption would apply, and employers are not able to pander to client preferences. Genuine Occupational Requirements only apply to recruitment, promotion, training and dismissal and not to contractual terms.

Positive action

Positive action (doing something to prevent or compensate for disadvantages experienced by people of a certain age group) is allowed in two areas:

• for access to training and education facilities
• to encourage people to take up employment opportunities.

So employers may target their recruitment advertising at certain groups which are under-represented in the workforce as long as the position itself is open to all ages. Selection on the basis of age will not however be lawful, unless it can be justified.

Penalties

In line with race, sex, and disability discrimination, compensation is unlimited should discrimination on the grounds of age be found. Also as with the other forms of discrimination, there are no qualifying periods. Basic awards are calculated in the same way as statutory redundancy payments and are amended in the same way (ie age/length of service calculators retained, but upper age limit removed).

Cases of age discrimination are heard in the employment tribunals, with the exception of claims against providers of further or higher education which must be brought in the County Courts in England and Wales, and the Sheriff Courts in Scotland. Proceedings must be brought within three months of the date of the alleged discrimination (six months in the County Court). With effect from 6 April 2008 amendments to the age regulations closed a loophole in connection with time limits (the original Regulations did not properly provide for the three month extension of time under the dispute resolution regulations).

It would seem that tribunals will be prepared to infer discrimination, if the employer cannot defend its case with consistent, clear and well-documented evidence to the contrary. An example is Wilkinson v Springwell Engineering Limited. In this case, an 18 year old administrator won more than £16,000 compensation. Miss Wilkinson was employed as an office administrator. During her probationary period, her employer decided that she was not performing sufficiently well and she was therefore told that her performance must improve over the following few months. Another, older, office administrator was asked to assist with her work load. After two months' employment, Miss Wilkinson was dismissed and she alleged that her line manager said that this was because she was too young for the job. Her claim was successful as the employer failed to provide evidence that she lacked capability to do the job satisfactorily. The tribunal stated that Springwell had relied on a "stereotypical" assumption that capability equals experience and experience equals older age.

Awards in age claims may be high for older workers because of the difficulty in obtaining alternative employment - also there may be a greater number of claims because older workers may be less concerned about the long-term career implications of bringing a tribunal claim.

Complying with the regulations

In order to comply with the regulations, we recommend the following actions:
 

• Review your policies

  Equal opportunities policies and practices should include a commitment to remove arbitrary age discrimination and promote the adoption of job-related criteria for all employment decisions.

  Diversity and bullying/harassment policies should also be reviewed and updated, and refer to both direct and indirect age discrimination.

  A "health-check" of all employment policies is recommended - including recruitment, training, promotion, benefits, retirement, redundancy etc to eliminate all unjustifiable age discrimination.

  Change any blanket policies that have an age element, and instead, consider every situation on its own merits. Consider each employee on an individual basis, and determine whether there is any risk.

  Consider whether you have any policies which, seemingly innocent, may unintentionally affect any particular age group. Think like an outsider - how would your policies appear to an objective third party?

  If you find potential discrimination, is this there for a legitimate need, and is the impact of the policy proportionate to the perceived need?
   
  

• Recruitment

  Use properly written job and person specifications prior to any recruitment activity to ensure that you focus on the requirements of the post concerned and the skills necessary to undertake this.

  Check that any experience required in your person specifications is justified. If you have tended to include "xx years' experience of ..." then do consider this seriously - such time serving requirements may not necessarily tell you the depth or range of experience, some people can gain huge experience in a very short time whilst others may take longer - you could be indirectly discriminating against younger people. Also asking for a driver with 5 years' experience actually excludes anyone under the age of 22 and is therefore indirectly discriminatory so you would have to be able to justify this.

  Consider the roles for which you commonly require health checks and ensure that you do not apply these checks to individuals over a certain age, but to all applicants. Consider also the qualifications you are looking for - "French GCSE" could be indirectly discriminatory against those who have other qualifications such as "O" levels or "CSE"s - perhaps what you need is "ability to speak basic French". Equally do you need a graduate - or someone of "graduate calibre"? Requirements for "modern" degrees, such as media studies and information technology should be reconsidered, as should your requirements for a "recent graduate" or "newly-qualified" person.

  Age, age-related criteria or age ranges should not be used in adverts (including graduate recruitment activities) other than to encourage applications from age groups who may be under-represented in your business. Where this is the case, it should be clearly stated. Use positive imagery and language to appeal to the widest of age groups: not only is it advisable to avoid words like "young" and "mature", but ageist language such as "funky" or "energetic" or "dynamic" should be avoided. (Older candidates can of course be energetic and dynamic, and who wants to appoint candidates lacking energy or dynamism anyway?) Other examples include the words "ambitious", "hungry", "vibrant", "gravitas", "youthful", "quick-learner", "self-starter", and "high-flyer".

  The common wording "salary according to age and experience" could be indirectly discriminatory. Asking for "school leavers" is likely to put off older applicants.

  The purpose of job advertisements is to attract the best qualified candidates: it does not therefore make good business sense to deliberately exclude suitably qualified candidates on the basis of their age. Talk to employees of different ages about the content of your job adverts and find out what would attract or appeal to them. Find out what they think are the key benefits of working for you.

  Place your job adverts in different places, for example local media or specialist publications or newsletters, to ensure they reach different age groups and audiences. Advertise a vacancy openly - don't simply rely on internal recruitment, word of mouth, or recommendations of friends and relatives of your current employees. Limiting your vacancies limits your chances of getting the right person for the job. Ensure special recruitment programmes, like those for graduates or managers, are open to all ages. Also bear in mind that far more people graduate nowadays than 20 years' ago - do you really need graduates or do you need someone of a particular level of capability? Asking for "recent graduates" puts older candidates at a disadvantage - do you really just want "someone with up to date skills"? and if your recruitment of graduates is normally restricted to the "milk round" it would be advisable to consider using a broader recruitment strategy.

  Don't just consider the language but look at visual imagery too. Adverts portraying only people of certain age groups should be avoided.

  Similar to other forms of equal opportunities monitoring, it is advisable to state on application forms that age will not be taken into account in employment decisions, but used only for monitoring purposes. We recommend that you do not ask for age or date of birth on your application forms (nor unnecessary employment history), but instead put age or date of birth on the equal opportunities information form alongside other monitoring information. This information should be requested in a "tear-off" slip which is removed during the shortlisting and interviewing process. Monitor how many people from different age groups apply - you can then see if your adverts are attracting different age groups and audiences.

  Offer alternatives to online applications - older employees are statistically less likely to be familiar with computers or to have Internet access. So allow alternatives, such as handwritten forms sent by post.

  Ask applicants for information that will show you they can do the job - be clear about what the job entails and what the key duties are. Avoid setting restrictive standards not just for experience, but also for personal qualities. Always consider if they are necessary. Often qualifications or specific experience is requested because "that's the way it's always been", not because they are necessary for the job. If you need to ask about qualifications, make sure they are relevant for the job. Consider whether to move away from the traditional cv with its chronological ordering of jobs towards a skills-based application form which removes all direct and indirect reference to age and which requires candidates to submit situations from their past work, educational or other experience to demonstrate competencies.

  Do look carefully at your selection criteria. Age discrimination is particularly rife in customer-facing roles and blue collar jobs where physical fitness is a requirement. However, youthfulness is not necessarily linked to attractiveness or energy levels or ability.

  Never use equal opportunities information as part of your selection process. This is supplied by candidates for monitoring purposes only. Always assess candidates on their ability to do the job, relevant knowledge and experience and personal qualities, not their age. If it's available to you, psychometric testing is an objective way of assessing candidates. Apply selection criteria fairly and consistently across all applicants.

  Interviewers should be aware that prejudices and stereotypical views are often incorrect and be trained to disregard these. Train all staff responsible for selecting and interviewing in equal opportunities, as without this knowledge they may discriminate unwittingly and leave you open to a claim. Break down prejudices by using employees of different ages in the recruitment process and wherever possible use a mixed age interview panel. If you use a recruitment agency, make sure you check that they use age-diverse principles and practices.

  At interview, ask questions related to the job rather than ones about personal circumstances. It is useful to agree questions beforehand based on your person specification and job profile. Make sure your decisions are objective - do not base your decisions on prejudice, stereotypes or age bias.

  Use age profiling to monitor the selection process at short-listing, interview and appointment to ensure you have been fair.

  Many employers have already taken positive action to attract older workers, so consider doing the same - but be careful not to discriminate against younger workers in the process! Positive action to correct an age imbalance in the workforce is acceptable.
   
  

• Medical advice

  Judgements should not be made about someone's abilities or fitness on grounds of their age, but an occupational health or medical practitioner should be asked to give a judgement on ability to do the role in question, if necessary.

  Policies requiring workers over a certain age to undergo physical testing are discriminatory. Rigorous physical testing is still possible where there are health and safety considerations, but arbitrary cut-off ages are not allowed.

  Many studies show that workers of all ages are on average equally effective in their work and that absenteeism varies very little between the groups.
   
  

• Fixed-term contracts

  Reduced duration fixed-term contracts should not be used for employees over a certain age, as unjustifiably treating someone less favourably than another person on the grounds of their age will amount to direct discrimination.

  Employers could try to argue that this is legitimate and proportionate - firstly on the grounds that older employees, particularly in more physical roles, tend to be more injury prone and possibly do not perform so well. But whilst this may be generally true, some younger employees may be more prone to injury than their older colleagues. Any employer will face difficulties in showing that a blanket policy which does not take individual circumstances into account is "proportionate". (An offer of a shorter contract may well be justifiable however if it takes into account a recent injury record, or concerns raised by a medical examination or fitness test.)
   
  

• Statutory payments

  The previous age limits for Statutory Sick Pay, Statutory Maternity Pay, Statutory Adoption Pay, and Statutory Paternity Pay were removed so that the legislation for all four statutory payments applies in exactly the same way to all.

  • The lower age limit for SMP was removed for employees with an expected week of confinement on or after 14 January 2007.
  • Under 16s qualify for SSP from 1st October 2006.
  • For over 65s, SSP is payable from 1st October 2006.
  • National Insurance payments still start at 16, and employee contributions stop at 65 for men and 60 for women.

  Ensure that any contractual sick or maternity pay schemes don't differentiate on grounds of age.

  The age banding for the National Minimum Wage (NMW) continues. BERR defends this on the grounds that the minimum wage is an area where discrimination could be objectively justified in order to prevent employers from laying off younger workers.

  Employers may continue to pay less to workers under the age of 22, provided that their pay differentials mirror the NMW. This exemption only applies where the NMW age bands are used (ie 16 and 17; 18-21 and 22 and over) and where the workers under the age of 22 are paid less than the adult NMW. The NMW exemption is therefore of no assistance to employers who pay all workers in excess of the adult NMW rate. For those employers, any pay differentials based on age will only be lawful if they can be objectively justified as a proportionate means of achieving a legitimate aim.

  The lower and upper age limits in the statutory redundancy scheme were also removed (see below).
   
  

• Service related pay and benefits

  Pay and terms of employment should not be based on age-related criteria, but should reflect the value of individual contributions and standards of performance.

  Salary scales with annual increments will become increasingly less common. Instead incremental steps linked directly to the attainment of additional skills/competencies, or to performance standards will become more common.

  Increases in pay and benefits which are age-related are prohibited, but those which reward length of service of up to five years (typically extra holiday or additional sick pay) are allowed without the need for justification. Also benefits which have length-of -service requirements which mirror a similar requirement in a statutory benefit (eg redundancy, paternity leave, etc) are exempted and enhanced provisions for employees (which may include shorter timescales to become eligible for the benefit) are also acceptable.

  "Five years' service" can either be the length of time the individual has worked at or above a particular level, or the length of time the employee has been working for that employer in total. So increases related to a particular grading can be dated from the date of promotion etc. Service is calculated in whole weeks (not hours as this would disadvantage part-time workers). Ensure that you clearly specify how such benefits will be granted. The regulations also allow absences to be discounted from the calculation but this is where it becomes unclear - they do not specify to what extent sickness/disability should be discounted.

  For a benefit which covers length of service longer than five years, additional steps need to be taken and it must "reasonably appear to the employer that the way in which he uses the criterion of length of service" in relation to the benefit concerned "fulfils a business need of his undertaking". The examples given are encouraging loyalty or motivation, or rewarding experience of some or all workers. So if you have benefits which only accrue after five years, you will need to identify a business benefit, gather supporting evidence and record this - just in case it is challenged! Supporting evidence could include information about recruitment and retention, assessment of relative efficiency of staff with different levels of service, discussions with the union or consultation committee, or evidence from staff surveys.

  An equal pay case provides some idea of the sorts of arguments which may be relevant when justifying any length of service criteria which extend beyond five years.

  In Cadman v Health and Safety Executive, Mrs Cadman was paid less than four male colleagues who were all on the same grade, but had longer service. The Court of Appeal sought advice from the European Court of Justice on this, due to concerns re indirect discrimination against women. In this case, the advice was that employers should provide objective justification for such criterion, and show that they are an appropriate means of achieving a legitimate aim (eg to reward experience or loyalty). But it is also essential that such aims are implemented proportionately. So thought should be given to minimising any indirect discrimination against women - eg by guaranteeing that periods of maternity leave count towards length of service. The "legitimate aim" should also properly reflect the actual jobs - for example, experience may be far more valuable in managerial jobs than in more repetitive manual positions. There should be no distinction between the length of service criterion when comparing part-time and full-time workers.

  Some benefits are more expensive for older workers - eg higher insurance premiums for health insurance, death in service benefits and ill-health pensions. Cost alone is not an acceptable reason for withdrawing a benefit from these workers. Employers who offer set benefits to all staff need to ask themselves "is this benefit age-neutral and can everyone access it?" Age banding (for benefits) would constitute direct discrimination. Life assurance cover for workers who are retired can however cease on early medical retirement or at age 65.

  With flexible benefits schemes, care needs to be taken with older employees, whose benefits may cost more. In the first case to deal with this, Swann v GHL Insurance Services UK Limited, GHL Insurance Services was found not to have discriminated unlawfully. Its scheme gave employees a fixed 'flex-fund'. The fund was a percentage of basic salary used to "buy" a range of benefits which included private medical insurance (PMI), additional pension contributions, life assurance, critical illness cover, childcare vouchers, dental insurance, travel insurance, gym membership and payroll giving. Older individuals who wanted to take out the private medical insurance had to pay more out of their fund than younger employees: an employee, Mrs Swann, therefore brought a claim for age discrimination on the basis that the premiums for the PMI element of the flex package were age-related and therefore more costly for her than for a younger employee. The tribunal decided that since the calculation of the flex fund was age-neutral, Mrs Swann had not been treated any less favourably than younger employees.

  But they also - unusually - took the arguments one stage further, and considered what the outcome would be if they were wrong on this point. The tribunal considered if so, whether such treatment was justified as a "proportionate means of achieving a legitimate aim". They accepted that the main aim of the scheme was to enhance the recruitment/retention of staff; this was a legitimate aim and they also felt the scheme would achieve that aim. Before introducing it, the company had considered the views of its employees and sought external advice from a management company experienced in flexible benefits schemes. They had also established the PMI would be an attractive benefit to staff. The premiums within the PMI scheme were calculated by reference to actuarial assessments of the risk of an employee making a claim - all PMI providers calculate premiums based on age-banded tables. The tribunal noted that, after the first year, the premium would be adjusted to take into account the actual claim history of an individual employee and that the same discounts were available to all employees regardless of age. Two of the three tribunal members therefore felt that the company would have been able to justify any age discrimination in the scheme.

  So do check for service requirements for access to benefits, minimum and maximum entry ages, age-related benefit levels, benefit ceasing ages, and age-related flexible benefits rates.
   
  

• Training and development

  Particular age groups should not be automatically excluded from training and development programmes. Research shows that participation in work-related learning drops sharply once employees reach their 50s: 31% of 35-44 year-olds receive training, just under 30% of those aged 45-54 do, 23% of 55-59 year-olds, but only 14.6% of those aged 60-64 receive any training.

  Any in-house training programme or training provided by contractors - whatever their size or sector - should adhere to the anti-ageism regulations. This also applies to all courses offered by universities and other institutions of further or higher education, as well as private, public or voluntary sector training bodies, and adult education programmes, and the bodies that confer the qualifications achieved as a result of that training. Training providers cannot set age limits for entry to training, unless they can show there is a real need to apply them, or positive action is necessary to give people of a particular age access to vocational training - to prevent or compensate for disadvantages linked to age. Where there are no formal minimum or maximum age limits, they need to look at whether age is taken into account when considering applications for admission. An employee seeking access to, or already on, a vocational training course who feels he/she has been discriminated against on the grounds of age, may have a case for legal action, either against the employer or training provider.

  To avoid discrimination in assessing suitability for courses, the training provider should consider its admissions procedures and instead of using age should look at competencies or abilities. Requiring all applicants to sit an aptitude test and awarding places based on these results would not contravene the regulations.

  Despite the old saying, with equal training and development opportunities, older people are just as capable of learning new tricks! Traditional reluctance to train older workers should be countered by the fact that older workers tend to change jobs less frequently than young employees and correspondingly offer good potential return on employment and training investment. Since most skills have a three-five year shelf-life, it is worth investing in someone likely to stay at least that long.

  Be flexible with training methods, venues and times - everyone's needs and learning styles are different.

  Encourage mentoring in the workplace - both younger and older workers can help develop others through their knowledge, skills and expertise.

  Also ensure that all staff, particularly those making recruitment, promotion and management development decisions, are trained about the business and HR implications of age discrimination. Ensure that your managers are trained and equipped to conduct appraisals and manage performance and absence without bringing any prejudices into play, that managers who make discretionary decisions base these on objective evidence, and also that all managers realise that ageist jokes and banter may constitute harassment and cause offence. Some commentators have even suggested that the sending of "ageist" birthday cards could amount to harassment.
   
  

• Performance management

  In order to manage those employees who wish to continue working, but whose performance has slipped over the years, employers need to ensure that they have an effective performance management scheme in place. Many do not like to dismiss older (and loyal) staff, who are no longer performing to a satisfactory standard - and many also shy away from broaching this at all.

  Do check that your performance management practices are watertight - and that the same standards of performance are required regardless of the age of the employee, and that proper feedback, training and counselling is provided at all levels and all ages.

  Check that any performance appraisal criteria are not age related, but reflect competencies. Ensure that managers do not inadvertently use discriminatory terms - even where praising staff - eg "does well for his age" or "shows remarkable maturity for her age".
   
  

• Dismissal, including redundancy

  In redundancy situations, decisions on whom to select should be based on objective, job-related criteria rather than age. The business' need for knowledge, skills and competencies should be taken into account. "Last in, first out" may be indirectly discriminatory - since those who go first may be the younger members of the workforce. See our guide to redundancy .

  Employees aged 65 and over have the same unfair dismissal and redundancy payment rights as younger workers. The age multiplier used to calculate statutory redundancy payments remains, as do the two year service requirement, the 20 year service maximum and the statutory cap on a week's pay. The previous upper and lower age limits (65 and 18) were removed, as was the previous tapering from age 64.

  Employers who have a contractual policy which enhances the statutory provision need to remove any age criteria unless these mirror exactly the statutory weightings. Redundancy schemes that offer enhanced versions of the statutory redundancy scheme other than the permitted ones (see below) are unlawful, unless they can be objectively justified. This means that if an employer's redundancy scheme does not use exactly the same age bands and multipliers as the statutory scheme, it could be held to be discriminatory unless it can be objectively justified.

  The permitted enhancements are any or all of the following:

  • not applying the cap on a week's pay
  • multiplying the amount produced by the statutory calculation by a factor
  • increasing the number of weeks' pay for each year of service.

  So enhanced payment schemes such as "a week's pay (uncapped) for each year of service" or "a month's pay for each year of service" do not comply since these do not reflect the age bands and multipliers of the statutory scheme.

  Similarly schemes which use different age multiples will not comply, and are unlawful unless such schemes can be "objectively justified". Alan Johnson, a previous Secretary of State for Trade and Industry, commented: "Objective justification is a tough test. Employers will need to show that any age-based measure they take is a proportionate way of achieving a legitimate aim. If the legitimate aim can be achieved by non-discriminatory means, this must take precedence. The discriminatory effect of any age-based practice should be significantly outweighed by the benefits of a legitimate aim."

  The choice is to retain an enhanced scheme which may be challenged, or adapt the scheme to ensure it mirrors the state's age multiples (which may increase your payments for older employees and reduce them for younger ones - thus leading to problems) or consult and remove the scheme altogether - but again if this is a contractual right this is not easy to do!
   
  

• Statutory retirement age

  The age of 65 - at least until 2011 - remains the default retirement age for employees (this does not apply to office holders or partners). It does not constitute age discrimination to retire employees at or above the age of 65 where it is a genuine retirement.

  Do check any clause in your contracts relating to retirement to ensure that you don't have wording such as staff will retire "at the beginning of the month/the week in which your 65th birthday falls....". In Plewes v Adams Pork Produce Limited, the employer retired Mr Plewes on the day before his 65th birthday. The tribunal found that the default retirement exemption only applies where the employee retires on or after his/her 65th birthday. Mr Plewes' dismissal took effect before before his 65th birthday so they could not rely on the retirement exemption, nor could they objectively justify the retirement. Despite gaining alternative work through an agency within two weeks of his retirement. Mr Plewes' award was over £36,000!

  Retirement ages below 65 is only allowed if they can be shown to be "appropriate and necessary". This does not impact the age at which people can collect their state pension.

  The government is monitoring the retirement age provisions and will formally review this in 2011. In the meantime, in December 2006 the High Court heard a claim from Heyday (an organisation backed by Age Concern) that the age discrimination legislation contravenes the European equal rights legislation. Heyday complained of the default retirement age, and also felt that the ability to discriminate on grounds of age, provided that this can be justified, gives employers more freedom to discriminate than is allowed by the European Directive.

  The High Court decided to refer the case to the European Court of Justice (ECJ).

  In a Spanish case which went to the European Court of Justice (Palacios v Cortefiel Servicios SA), the ECJ decided that European equal treatment legislation does not overrule national laws allowing compulsory retirement if the national legislation is a "proportionate means of achieving a legitimate aim". The Spanish government had introduced the compulsory retirement law at a time of high unemployment as part of a national policy to promote better access to employment - basically it was felt that older workers should move aside to make room for the young. The ECJ thought that the promotion of full employment was a legitimate aim.

  The Advocate General of the European Court of Justice (ECJ) has considered Heyday's case and recommended that the court dismiss the challenge. His opinion is that a rule allowing employers to retire employees at 65 or over can in principle be justified under the Directive, provided that this is objectively justified within the context of national law. What this means is that the issue is one that should be determined by the UK courts, not by the EJC! The Advocate General's opinion is not binding on the ECJ, but in practice, is commonly followed. The final decision is expected later in December.

  This is not then the end of it however! The High Court assigned to the case would have to hear the legal challenge to ensure that our retirement age IS objectively justified. Unlike the Spanish case above, our retirement age was intended to meet the concerns of employers in relation to workforce planning and avoiding an adverse impact on the provision of occupational pensions and other work-related benefits. One aspect of 'workforce planning' was to avoid the blocking of jobs.

  And there could then be an appeal to the Court of Appeal, and possibly another reference to the ECJ for further guidance. So the issue may not be resolved for some years yet!

  In the meantime, the EAT has decided that an existing claim - Johns v Solent SD Limited - should be "stayed" (put on hold) until the outcome of the Heyday case is known. Following this, the President of the Employment Tribunals has directed that all similar cases should also be stayed. This affects claims that have already been lodged as well as future ones. The direction only affects claims brought in England or Wales (260 such claims have already lodged); we understand that Scottish cases will be referred to chairmen for individual decisions.

  Employers in the public sector now face particular problems. Public sector organisations are usually regarded as an "emanation of the state", and treated as legally bound to comply with European Directives. This means that public sector employees may be able to claim compensation if a public sector employer breaches a Directive, even though the employer's actions seem to comply with the UK regulations. This would leave public sector employers potentially facing thousands of backdated claims for age discrimination if the ECJ rules against the government. Although private sector employers do not share the same risk, if the ECJ finds against the Government all UK employers may be forced to relinquish their fixed retirement ages.

  But for the time being at least, and possibly for the future, employers can fairly dismiss employees when they reach the age of 65 on the grounds of retirement. The two key points to note are that the statutory retirement procedure must be followed (giving at least 6 months' notice of retirement) and that the employee must be aged 65 or over. However, all employees have the right to request to work beyond the age of 65 (or normal retirement date). Employers are obliged to inform their employees of this right, and to properly consider any such requests. The CBI reports that almost three-quarters of employee requests to continue working beyond retirement age have been granted - so maybe this aspect of the age regulations is not such an issue after all.
   
  

• Procedure for retirement

  A statutory procedure - see below - applies to dismissals on grounds of retirement, and failure to comply with this could lead to claims of unfair dismissal (if the claimant argues successfully that the real reason for dismissal is not retirement) and/or a penalty of eight weeks' pay (subject to the statutory weekly pay cap).

  In Todd v Sanquhar Home Limited, Mrs Todd was given only 12 weeks' notice of her retirement date. She requested to work beyond the normal retirement date and this was agreed, but she still brought a claim on the basis that there was a technical breach of the statutory procedures (she was not given the full 6 months' notice). She was awarded one week's pay in compensation. Compensation could of course have been much higher if the home had not agreed to Mrs Todd's request to continue working, and presumably is designed as a punitive measure on the employer for its failure to follow the procedures in full, but it still may seem harsh given that Mrs Todd suffered no actual loss!

  So - do ensure that you put in a simple system to remind you when employees reach their 64th birthdays, and which prompts you to provide the appropriate letters . Special transitional provisions applied to employees who were due to retire before April 2007.

  Employers are required to give written notification to employees at least six months (but not more than 12 months) in advance of their intended retirement date, in order to allow them to plan for their retirement. The three-stage statutory dismissal procedure does NOT apply to retirement dismissals at age 65, only the duty to consider working beyond the retirement age.

  Employers are required to notify employees of their right to request to work beyond the normal retirement age, and are then obliged to consider any such requests.

  • Provided the employer has complied with the duty to notify the employee of the intended retirement date, an employee's request can be made between three - six months before the notified date of retirement. (If the employer fails to comply with the duty to notify, the employee can make the request from six months before the intended date of retirement right up to the intended date of retirement.) The employee's request must be in writing and must state that it is made under paragraph 5 of Schedule 6 of the Employment Equality (Age) Regulations 2006. It must also say how long he/she proposes the employment should continue, ie indefinitely, for a specified period, or until a stated date.
  • unless the employer simply agrees to the request, the employer must hold a meeting with the employee to discuss it. The employee has the right to be accompanied at this meeting by a fellow worker. This meeting must be held within a reasonable period unless it is not reasonably practicable to do so. If it is not "reasonably practicable" to hold the meeting, the employer may consider the request without the meeting provided he considers any representations made by the employee.
  • the employer must notify the employee of the decision as soon as reasonably practicable. Employment will continue until this has been done, even if it is after the notified date of retirement.
  • if the request is refused, or the employer agrees to extend employment for a shorter period that requested, the employer must confirm in writing the date upon which the retirement will take place, and inform the employee of the appeal procedure.
  • The employee has the right of appeal. Any appeal must be made as soon as reasonably practicable after receipt of the decision being notified to him/her. The notice of appeal must set out the grounds of appeal, be in writing and be dated.
  • An appeal meeting must be held "as soon as reasonably practicable". The outcome of the appeal should be confirmed in writing, again as soon as reasonably practicable. Whilst a request to work beyond retirement age may extend employment beyond the planned retirement date, an appeal hearing will not do so, and can take place after retirement has taken effect.
  • If the employer agrees to an extension of employment, there is no need to give notice or follow the "duty to consider" procedure unless the new date is more than six months after the original proposed retirement date. If the new date is more than six months after the original proposed retirement date, then the procedure will have to be followed again.

  It is worth deciding, in advance of receiving any requests, the circumstances in which you would agree to extensions beyond retirement age. Employees who are retained should be employed on no less favourable terms that those before retirement age.

  Unlike the flexible working scheme there is no statutory list of grounds on which such a request can be refused, and the employer is not obliged to give any reasons for rejecting a request to continue working. (In practice, we suspect that most employers will choose to give a reason in order to try to resolve the problem and explain their reasoning - otherwise the employee is less likely to accept the decision and is more likely to appeal.) Unlike the Flexible Working Regulations, a tribunal does not have the power to order an employer to reconsider a request.

  Provided any dismissal is wholly or mainly by reason of retirement and the employer follows the retirement procedures and the retirement is at or above 65 (or any higher normal retirement age in that employment), then the dismissal will be fair.

  If you have failed to write to the employee no less than six months before you intend to retire him/her, then if you make the appropriate notification at least two weeks before the intended retirement date, a dismissal would not necessarily be automatically unfair - however, the award for failure to comply with the statutory procedure would apply. But, since an employment tribunal could still find the dismissal unfair, it would still be safer to delay the retirement date to allow the full six months to be given.

  If you have missed the retirement date, and your employee is aged over 65, then you can dismiss on grounds of retirement, but need to follow the above procedure, giving six months of the intended retirement date.

  Research shows that many employees coming up to retirement would welcome the opportunity of shorter hours, part-time or flexible working, consultancy, secondments and employment breaks, and to work beyond the normal retirement age. So do consider the advantages of using retirees as mentors to pass on experience and develop other employees through use of their knowledge and expertise. Our guide considers all aspects of how you manage retirement .

  Note that the default retirement provisions apply to employees - but the regulations cover non-employees such as non-executive company directors. The maximum age for directors of PLCs, which was 70, was removed from 6th April 2007. (However, as from October 2008 there is a minimum age of 16 for directors.)

  
   
  
• Pensions

  The age at which the state pension may be claimed remains 65 - although the government has already announced plans to encourage employees to delay their retirement - by offering a lump sum of £30K to those who delay their state pension to 70 rather than 65. Changes have also been made to the UK's pensions system to allow workers to draw a salary and occupational pension from the same employer (this was not previously possible).

  It is still be lawful to operate two pension schemes, such as a defined benefit scheme for existing employees and a defined contribution scheme for new staff. Minimum or maximum ages for admission to a pension scheme are still allowed, and schemes may still require employees to leave the scheme at say age 60, despite potentially working beyond this.

  Age-related employer contributions may continue if they are aimed at producing an equal outcome in pension benefits. Setting the level of pension benefits by reference to years of service may continue, as can setting a maximum number of years of pensionable service.

  Different rates of employer contributions to personal pension schemes are allowable if they are attributable to differences in remuneration.

  Occupational pension schemes are treated differently and the age regulations contain wide exemptions for them. Schedule 2 of the Employment Equality (Age) Regulations 2006, which came into force in December 2006, sets out those age-related aspects of operating occupational pension schemes that continue to be allowable, without having to be objectively justified by the schemes themselves. Any age-related practice not covered by Schedule 2 will have to capable of being objectively justified by the individual scheme.

  The list below includes some of the provisions which remain lawful:

  • a maximum/minimum age for scheme admission
  • the use of age criteria in actuarial calculations
  • minimum level of pay for admission to a scheme or for treatment as pensionable pay (so long as that minimum level is not in excess of the lower earnings limit)
  • age related contributions to final salary schemes where the aim is to meet the cost of the benefits provided
  • salary-related contribution rates
  • minimum age for entitlement to/payment of scheme benefits
  • additional pensionable service awards to those members who retire early on the grounds of ill-health
  • bridging pensions for men between the ages of 60-65
  • payment of a reduced spouse's pension on the basis of the difference in age between the member and spouse
  • calculating defined benefits on the basis of pensionable service
  • upper limit on pay/length of pensionable service used to calculate benefits
  • increases to pension in payment payable only to pensioners aged 55 or over closure of the scheme to new members.

  Where other age-related pension rules are in existence, and these are not covered under exemptions, the employer has to be able to objectively justify them. If unable to do so, they have to be changed or removed.
   
  

• Monitoring

  Monitoring should be carried out at regular intervals to find out whether or not there is any indication of unfair discrimination against particular age groups. Check that you have age distribution statistics for all employees, applicants and retirees - and that age is included on your monitoring forms, procedures and any positive action programmes.

  A formal age equality audit is recommended to look in detail, not just at your written procedures, but also informal practices, and eliminate any areas of either direct or indirect age-related criteria which can't be properly justified.

Further help

The Age Positive website provides:

• information on the European Equal Treatment Framework Directive and its implications for the UK
• facts and figures on age
• details of the Code of Practice on Age Diversity
• guidance on good practice
• case studies of companies which have adopted "Age Positive" policies and
• a list of useful publications and reports.

Further information on the regulations themselves are available on the BERR website including a summary guide to the regulations and the full regulations.

Frequently asked questions (FAQs)