Age concern

Unless employers make radical changes to their recruitment policies, almost everyone in the working population will soon have the right to bring a discrimination claim at some point in their career. Draft regulations on age discrimination that were published in July, and are due to take effect on 1 October 2006, are about to completely change the rules of the game.

Employers will have to take care not to give access to jobs, promotion or other opportunities on the basis of age, experience, qualification or service. In some cases, it may be allowed, but only where the business needs justify it.

In particular, employers will need to rethink retirement practices, remuneration packages and recruitment practices. Key changes are:

• Without a sound business reason, retirement ages under 65 will be unlawful
• Employees aged 65 and over will have the right to claim unfair dismissal if dismissed, even for “retirement”. They will be able to argue that retirement was not really the reason for dismissal
• Employees will have the right to request to work beyond the retirement age. There will be a statutory consultation process, which must be followed before any employee is “retired”
• Under 18s and over 65s will be entitled to statutory redundancy pay for the first time. And it will be unlawful to make employees redundant on a “last in, first out” basis, unless justified by business needs.

Many employers base aspects of their benefits package on length of service. But this will only be allowed in all cases during the first five years of service. After that, the employer will have to justify the practice on the basis of business needs.

Incremental pay structures that exceed a five-year period may be unlawful, unless the company can justify them by showing they meet a real business need.

Changes will have to be made to job specifications, which must become competency-based. Those that request a certain number of years’ experience may discriminate against the young and the old. Graduate recruitment schemes and management “fast-tracking” may be discriminatory.

If they continue to use these practices, employers will have to justify them or face age discrimination claims.

Job specifications wanting a number of years’ experience, and even graduate recruitment schemes could be discriminatory

Medicals will also be affected by the regulations, amounting to direct discrimination if they are age-related. A general requirement to have a medical will indirectly discriminate against the older worker (or the disabled worker) and must be justified by the needs of the post.

If any further incentive to act now is needed, employers should note there will be no limit on the compensation tribunals can award for age discrimination. And damages will be able to be awarded not just for monetary losses, but also for injury caused to workers’ feelings.

One area that will be untouched is occupational pension schemes, because exemptions will exist for age restrictions imposed on the admission to schemes and entitlement to benefits. It appears there is an intention to exempt employer contributions to personal and stakeholder pensions, but this is not yet clear.

However, these new rules will also apply to anyone who is self-employed and has a contract to work personally for a business, and to agency staff, as well as employees. Applicants to positions and former staff will also be covered.

The draft regulations are now in a period of consultation. When this finishes in October 2005, the full details of the provisions will be revealed. It is currently unclear how the new laws will apply to people retired on, or soon after, 1 October 2006, but it may be necessary to begin statutory retirement procedures no later than March 2006.

As a priority organisations should now be auditing for retirement dates due on 1 October 2006 and for a period of six months afterwards; auditing all policies and procedures for compliance; and implementing policies to prevent age harassment. They should also start training managers now. Evidence of an ageist culture before October 2006 may be used in claims after that date.