Age discrimination: an overview
This week, Sarah-Marie Williams of Clyde & Co begins a series of articles on age discrimination with an overview of the forthcoming Employment Equality (Age) Regulations 2006.
Legislation in relation to discrimination on the grounds of sex, gender, disability, sexual orientation and religion or belief already exists in the UK, and in six months age discrimination legislation will also be in place. The final draft of the Employment Equality (Age) Regulations 2006 has now been approved by Parliament and the Regulations are due to come into force on 1 October 2006.
The Regulations will implement the age discrimination provisions of the Equal Treatment Framework Directive (2000/78/EC). In accordance with the Directive, age discrimination laws must be in force by 2 December 2006. However, transitional provisions relating to retirement will be in place until April 2007.
General principles
Many of the provisions in the Age Regulations are similar to the law applied to discrimination on the grounds of sex, race, sexual orientation and religious belief. There are also similarities to some aspects of the disability discrimination legislation.
As under other discrimination legislation, 'employment' is defined under the Age Regulations as meaning 'employment under a contract of service or of apprenticeship or a contract personally to do any work'. Thus, the new Regulations will cover both workers and employees, and will apply during recruitment, employment and retirement.
The Age Regulations, as with the other discrimination legislation, prohibit direct and indirect discrimination, harassment and victimisation. Direct age discrimination occurs where a person is treated less favourably by an employer on grounds of age. Indirect discrimination occurs where an employer applies a provision, criterion or practice that puts or would put a person of a particular age group at a disadvantage compared with other persons. As with the other discrimination legislation, the relevant circumstances of the comparator(s) must be the same or not materially different. However, the Regulations give no indication of the difference in age (or age group) necessary for a person to be a comparator.
Objective justification
Under the Age Regulations, it may be possible for an employer to use the defence of justification in respect of direct and indirect age discrimination. This is different from any of the other equality legislation, where it is only possible to justify indirect discrimination objectively. The justification test for both direct and indirect age discrimination is applicable if the action complained of is 'a proportionate means of achieving a legitimate aim'. However, the Regulations do not list acceptable legitimate aims that might be considered as justifying age discrimination.
The original consultation paper, 'Age Matters', published by the Government in July 2003, lists potential legitimate aims as health, wealth and safety (including the protection of old and young people), facilitation of employment planning, particular training requirements, encouraging and rewarding loyalty, the need for a reasonable period of employment before retirement, and recruiting and retaining older people.
It must be noted that there was no reference in the original consultation paper to cost. However, the consultation paper, 'Coming of Age', published by the Government in July 2004, stated that 'economic factors such as business needs and considerations of efficiency may also be legitimate aims', although it also stated that 'discrimination will not be justifiable merely because it is more expensive not to discriminate'.
Refusing instructions to act unlawfully
The Age Regulations provide that age discrimination will occur where a person is treated less favourably as a result of not following an instruction to carry out an act that is unlawful under the Regulations. Furthermore, age discrimination will occur where a person is subjected to less favourable treatment as a result of complaining about that instruction. There is no such provision in the other discrimination legislation.
Harassment and victimisation
The harassment and victimisation provisions in the Age Regulations mirror the discrimination legislation relating to sexual orientation and religion or belief.
Under the Age Regulations, harassment occurs where a person, on grounds of age, engages in unwanted conduct that has the purpose or effect of violating another person's dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for that person. It is unclear at present what type of behaviour the tribunals and courts will class as harassment on grounds of age.
Victimisation occurs where a person treats another person less favourably for a prohibited reason, for example where an employee brings proceedings for discrimination against his or her employer and, as a result, is treated less favourably by the employer.
Exceptions
As a general principle, any disadvantage suffered by an employee based on age can be challenged as potentially discriminatory under the Age Regulations. However, the legislation sets out a number of specific exemptions, including:
genuine occupational requirements;
positive action; and
service-related benefits.
Genuine occupational requirements allow an employer to treat a job applicant or an employee differently on grounds of age if he or she has a particular age-related characteristic that is a genuine requirement for the job and if it is proportionate to apply that requirement in the particular case. This exemption can be relied on when promoting, training, transferring or even dismissing an employee. However, employers will need to consider carefully the nature of the work and the context in which it is to be carried out before relying on this exemption.
Although positive age discrimination is not permitted, positive action is lawful under the Age Regulations. Thus, training that prevents or compensates for disadvantages on grounds of age is permitted, for example where employees of a particular age group are provided with training to assist them in applying for a particular role or are encouraged to take advantage of opportunities for particular work.
Under the Age Regulations, employers are permitted to treat workers differently in relation to awarding service-related benefits. Where a worker has less than five years' service he or she cannot bring a claim for age discrimination in relation to comparing his or her benefits with those of a worker with longer service. However, if a person with more than five years' service is put at a disadvantage, the employer will need to show that the way in which it uses the criterion of length of service in relation to the benefit fulfils a business need of the undertaking, for example 'by encouraging the loyalty or motivation or rewarding the experience of some or all of the workers'.
Retirement
The Age Regulations provide for a default retirement age of 65 (although this will be reviewed in 2011). Compulsory retirement under the age of 65 is not permitted unless it can be objectively justified. However, compulsory retirement over the age of 65 is allowed provided that the dismissal is fair.
The Regulations set out procedures that must be followed when retiring an employee. If these procedures are not followed, the dismissal will automatically be unfair. The provisions require the employer to give between six and 12 months' notice to the employee prior to retirement. In addition, a procedure similar to the statutory disciplinary and dismissal procedures must be followed.
Where an employer's normal retirement age exceeds 65, a dismissal before that age may amount to discrimination.
Under the Age Regulations, employers have a duty to consider any request from an employee to work beyond his or her retirement date. Employers must inform employees of this right six to 12 months before their retirement. The procedure to be followed has been likened to that under the flexible working legislation in that employers are under a duty to consider any such request, but are not under a duty to grant it.
Transitional provisions have been put in place for retirements taking place between 1 October 2006 and 31 March 2007.
Unfair dismissal and redundancy legislation
It is intended that the Employment Rights Act 1996, section 98, which deals with unfair dismissal, will be revised so that retirement will become a fair reason for dismissal (where set requirements are met).
Other amendments to the Act include:
the removal of the upper age limit for bringing an unfair dismissal claim;
the removal of the tapering of the basic award for unfair dismissal between the ages of 64 and 65; and
a new provision awarding compensation where employers do not comply with the duty to consider working beyond retirement.
Amendments will also be made to redundancy legislation. The statutory redundancy scheme currently calculates redundancy payments by length of service up to a maximum of 20 years. This calculation is to be retained as the government has decided that the age-based multipliers best reflect the economic position of the three age bands and that the difference between the multipliers can therefore be objectively justified on the basis that it is a legitimate aim. However, certain changes will be put in place, namely the removal of:
the lower and upper age limits (18 and 65) for receiving a redundancy payment;
the barrier to entitlement to a redundancy payment where the employee is also entitled to claim a pension; and
the tapering of the amount of a redundancy payment after the employee is 64.
Remedies
Enforcement and remedies in relation to age discrimination claims reflect the provisions in the other discrimination legislation. Thus, proceedings must be brought within three months of the alleged discrimination. The compensation will be uncapped. There will be a questionnaire procedure similar to that for other discrimination legislation.
Conclusion
Given that every worker, young and old, will gain protection under the Age Regulations, it is anticipated that tribunals will be busy dealing with claims from October 2006.
It is essential for employers to prepare in advance for these changes, not least because evidence of employers' conduct prior to the Age Regulations coming into force in October 2006 will be admissible in claims under the legislation. Thus, employers are urged to review all documentation, practices and policies to ensure compliance. Furthermore, employers should familiarise themselves with the new provisions relating to unfair dismissal and prepare themselves for the new procedure in relation to considering requests to work beyond retirement dates.
Next week's article will look at the dismissal aspects of age discrimination.
Sarah-Marie Williams is a solicitor in the employment team at Clyde & Co (sarah-marie.williams@clydeco.com)
Further information on Clyde & Co can be accessed at www.clydeco.com
