Age Regulations 2006: Part 2 - Discrimination in employment

The second part of our guide to the Employment Equality (Age) Regulations 2006 focuses on the new rules prohibiting age discrimination by employers.

This is the core of the Regulations. As far as employment is concerned, however, the main substantive provisions prohibiting age discrimination are set out comparatively compendiously in reg. 7 and much of the rest of the Regulations set out various exceptions to this prohibition.

Applicants and employees

7. -

(1) It is unlawful for an employer, in relation to employment by him at an establishment in Great Britain, to discriminate against a person -

(a) in the arrangements he makes for the purpose of determining to whom he should offer employment;

(b) in the terms on which he offers that person employment; or

(c) by refusing to offer, or deliberately not offering, him employment.

(2) It is unlawful for an employer, in relation to a person whom he employs at an establishment in Great Britain, to discriminate against that person -

(a) in the terms of employment which he affords him;

(b) in the opportunities which he affords him for promotion, a transfer, training, or receiving any other benefit;

(c) by refusing to afford him, or deliberately not affording him, any such opportunity; or

(d) by dismissing him, or subjecting him to any other detriment.

(3) It is unlawful for an employer, in relation to employment by him at an establishment in Great Britain, to subject to harassment a person whom he employs or who has applied to him for employment.

(4) Subject to paragraph (5), paragraph (1)(a) and (c) does not apply in relation to a person -

(a) whose age is greater than the employer's normal retirement age or, if the employer does not have a normal retirement age, the age of 65; or

(b) who would, within a period of six months from the date of his application to the employer, reach the employer's normal retirement age or, if the employer does not have a normal retirement age, the age of 65.

(5) Paragraph (4) only applies to a person to whom, if he was recruited by the employer, regulation 30 (exception for retirement) could apply.

…

(8) In paragraph (4) "normal retirement age" is an age of 65 or more which meets the requirements of section 98ZH of the 1996 [Employment Rights] Act.

The age discrimination Regulations follow the other discrimination law strands in prohibiting direct and indirect discrimination on grounds of age in selection arrangements, recruitment, promotion, terms of employment, vocational training and dismissal.

Age will present particular issues in respect of all these areas, some of which we highlight below. In the absence of a statutory commission with the authority to produce a code of practice, Acas has produced a guide for employers¹, which contains some helpful advice and examples.

In the discussion below, it must be borne in mind that neither direct discrimination nor indirect discrimination will be unlawful if the employer can show that the treatment is "a proportionate means of achieving a legitimate aim". We discussed what this might entail in the first part of our guide, Age Regulations 2006: Part 1 - Key general principles.

Legitimate aims

Examples of potentially legitimate aims, which were originally going to appear in the Regulations themselves, have found their way into the Acas guide. Three are listed: "economic factors, such as business needs and efficiency"; "the health, welfare and safety of the individual (including protection of young people or older workers)" and "the particular training requirements of the job". Health and safety considerations are discussed in box 1 .

Application forms

An issue that employers have to face right away is whether changes should be made to application forms to comply with the new legislation. In particular, should all references to age or the applicant's date of birth be removed?

This would be prudent. The Department of Trade and Industry's (DTI) consultation said that requiring a birth date or age on an application form is "not age discriminatory in itself", but that it could be used to make an age discriminatory decision. The DTI said employers should consider moving questions regarding age to a diversity monitoring form, "which those who take the recruitment decisions would not get to see". Acas agrees, suggesting that age and date of birth should be removed from the main application and included in a diversity monitoring form to be retained by HR/personnel. It also recommends: "Review your application form to ensure that you are not asking for unnecessary information about periods and dates. Asking for age-related information on an application form could allow discrimination to take place."

The case for removing this information may be even stronger because it could now be open to argument that the fact that an employer, in the face of this guidance, persisted in asking about an applicant's age is sufficient to create a prima facie case of age discrimination, shifting the burden of proof to the employer.

Advertising

An inference of age discrimination could also be drawn from the use of age-referent words in job advertisements. Acas says that words to be avoided include "mature", "young" or "energetic". It then gives an example of stereotyping: "We require an enthusiastic person, flexible enough to fit in with our fast-moving marketplace, not afraid of challenging the status quo and in touch with latest thinking."

Words such as "young" and "mature", which are directly linked to a particular age group, clearly are to be avoided, but what about "energetic" or the words used in the Acas example?

This is a difficult point. On the one hand, it might be said that older applicants will be put off applying by use of these words, which they may think signal that the advertiser is seeking a young candidate. On the other hand, it might also be said that it is the drafter of the Acas guidance that is applying the stereotype, by assuming that older people are not "energetic", "enthusiastic" or "flexible", etc.

It might also be thought that employers should be entitled to seek candidates for their business with these attributes. It is the presumption that older applicants will not have these characteristics that is the problem.

Experience requirements

Experience requirements tend to discriminate against younger people. Employers will need to review these to ensure that they can be defended. Acas points out that experience requirements "may rule out younger people who have the skills required but have not had the opportunity to demonstrate them over an extended period".

Exclusion of workers near retirement age

Regulation 7(4) excludes from the right to complain of age discrimination in respect of selection arrangements and recruitment all those who are within six months of the national default retirement age of 65, or the particular employer's normal retirement age if that age is greater.

We considered this in detail in Age Regulations 2006: Part 1 - Key general principles. It might be thought that the existence of reg. 7(4), by setting a standard, will make it more difficult for employers to reject on age-related grounds applicants who are more than six months away from retirement.

Note that the exclusion is also limited in scope. It relates only to age discrimination against prospective employees. The exclusion of workers near retirement age does not apply to existing employees, who are protected by reg. 7(2) against age discrimination in respect of promotion applications, training opportunities, terms of employment, benefits, detriments and dismissal.

Performance appraisal

It is generally agreed that performance appraisal will assume a very important role once age discrimination legislation comes into force. Performance appraisals are a much more accurate tool for workforce planning than arbitrary age limitations.

Writing in Personnel Today, Alan Johnson, then secretary of state for trade and industry, gave an example illustrating this: "A construction firm hires most of its workers for physically demanding and often dangerous, labouring work. The firm sets a maximum age for its on-site workers … The firm feels that, if challenged, it can objectively justify this approach on the grounds that older workers are less physically capable than younger workers. However, the HR director suggests that the evidence does not necessarily support this practice, as some older workers are just as capable of meeting the physical demands of the job. The firm now uses 'performance appraisals' when recruiting, whereby skilled workers of any age must show that they are fit enough to do the job, rather than using a practice based upon an arbitrary age." The Acas guide points out, however, that many people have preconceptions about age that can influence the judgments they make when carrying out performance appraisals. "If these preconceptions appear in performance appraisals through the use of inappropriate comments - such as 'does well despite their age' or 'shows remarkable maturity for their age' - they will undermine the whole basis of a fair appraisal system."

Exception for statutory authority

27. -

(1) Nothing in Part 2 or 3 shall render unlawful any act done in order to comply with a requirement of any statutory provision.

(2) In this regulation "statutory provision" means any provision (whenever enacted) of -

(a) an Act or an Act of the Scottish parliament;

(b) an instrument made by a minister of the Crown under an Act;

(c) an instrument made under an Act or an Act of the Scottish parliament by the Scottish ministers or a member of the Scottish Executive.

This regulation provides that any discrimination on grounds of age in order to comply with a requirement of a statutory provision will remain lawful. The notes on the Regulations issued by the DTI emphasise that "this gives an absolute defence to an employer who is forced to discriminate against an individual in order to comply with age limits required by legislation", but that the exception applies only to acts that are required by the statutory provision. "If a provision gives a permission or discretion to act, this provision will not protect the exercise of that discretion in a discriminatory way."

An example that was given in the consultation of where the statutory authority exemption would apply is in connection with employment in bars. The Licensing Act 1964 prohibits employing persons under the age of 18 in any bar at a time when the bar is open for the sale or consumption of intoxicating liquor. Other examples are the various age rules in respect of road transport licences.

It is interesting to compare the wording of the age Regulations with the comparable provisions in s.51 of the Sex Discrimination Act as amended. This provides an exemption in respect of "any act done by a person if it was necessary for that person to do it in order to comply with a requirement of an existing statutory provision".

On the face of it, this wording seems stricter: not only does there have to be a statutory requirement, but the discriminatory act has to be "necessary" in order to comply with it. In contrast, although the age discrimination Regulations make it clear that there must be a statutory requirement, once the statutory requirement is established, the absolute defence could be interpreted as applying to any discriminatory act done for the purpose of complying with the requirement, regardless of whether it is objectively necessary.

Be that as it may, the government claims that "a trawl of primary and secondary legislation was undertaken and any provision which could not be objectively justified in terms of article 6(1) [of the Framework Employment Directive] was repealed or revoked, or amended if appropriate."

Exceptions for positive action

29. -

(1) Nothing in Part 2 or 3 shall render unlawful any act done in or in connection with -

(a) affording persons of a particular age or age group access to facilities for training which would help fit them for particular work; or

(b) encouraging persons of a particular age or age group to take advantage of opportunities for doing particular work; where it reasonably appears to the person doing the act that it prevents or compensates for disadvantages linked to age suffered by persons of that age or age group doing that work or likely to take up that work.

(2) Nothing in Part 2 or 3 shall render unlawful any act done by a trade organisation within the meaning of regulation 18 in or in connection with -

(a) affording only members of the organisation who are of a particular age or age group access to facilities for training which would help fit them for holding a post of any kind in the organisation; or

(b) encouraging only members of the organisation who are of a particular age or age group to take advantage of opportunities for holding such posts in the organisation, where it reasonably appears to the organisation that the act prevents or compensates for disadvantages linked to age suffered by those of that age or age group holding such posts or likely to hold such posts.

(3) Nothing in Part 2 or 3 shall render unlawful any act done by a trade organisation within the meaning of regulation 18 in, or in connection with, encouraging only persons of a particular age or age group to become members of the organisation where it reasonably appears to the organisation that the act prevents or compensates for disadvantages linked to age suffered by persons of that age or age group who are, or are eligible to become, members.

The wording of the positive action provisions is drawn from art. 7(1) of the Framework Employment Directive. It directly parallels that found in the religion or belief and sexual orientation Regulations, and contrasts with the Race Relations Act, in which positive action is conditional on evidence showing that the racial group concerned is under-represented at the employer's establishment.

For positive action relating to age to be lawful, it will be sufficient if it "prevents or compensates for disadvantages linked to age" among the relevant section of people to whom the positive action relates. The Acas guide suggests: "you might place advertisements where they are more likely to be seen by people in a disadvantaged group. Or you might limit access to a computer training course to those over 60 because they may have had less exposure to such training in the past."

Positive action, of course, is different from positive discrimination on grounds of age, which is unlawful unless justified by one of the other exemptions. The Acas guide includes the following example of positive action: "Green and Co, a transport company, see from their internal monitoring processes that the company has a mature age profile with disproportionately few workers under 40. Not wanting to miss out on the talents of all the local community, they include a statement in their next adverts saying 'We welcome applications from everyone irrespective of age but, as we are under-represented by people under 40, would especially welcome applications from these jobseekers. Appointment will be on merit alone."

The Acas example might be thought to be sailing close to the wind in several respects. First, in contrast to the Race Relations Act provisions, the statutory wording in the age Regulations makes it clear that it is not sufficient that there is under-representation of those of a particular age group.

The under-representation has to relate to "disadvantages linked to age suffered by those of that age or age group". In the example given, there is no suggestion that the company is short of workers under 40 because of any such disadvantages that workers under 40 suffer that is linked to their age.

Second, the Acas example is too crude. The positive action dispensation is based on under-representation in particular posts, not the company's age profile as a whole. The fact that the company has no supervisors under 40 will not justify it in encouraging applications for secretarial positions from those under 40 unless there is also under-representation of younger workers in that particular job.

Exception for the national minimum wage

31. -

(1) Nothing in Part 2 or 3 shall render it unlawful for a relevant person ("A") to be remunerated in respect of his work at a rate which is lower than the rate at which another such person ("B") is remunerated for his work where -

(a) the hourly rate of the national minimum wage for a person of A's age is lower than that for a person of B's age, and

(b) the rate at which A is remunerated is below the single hourly rate for the national minimum wage prescribed by the secretary of state under section 1(3) of the National Minimum Wage Act 1998.

(2) Nothing in Part 2 or 3 shall render it unlawful for an apprentice who is not a relevant person to be remunerated in respect of his work at a rate which is lower than the rate at which an apprentice who is a relevant person is remunerated for his work.

(3) In this regulation -

"apprentice" means a person who is employed under a contract of apprenticeship or, in accordance with regulation 12(3) of the National Minimum Wage Regulations 1999, is to be treated as employed under such a contract;

"relevant person" means a person who qualifies for the national minimum wage (whether at the single hourly rate for the national minimum wage prescribed by the secretary of state under section 1(3) of the National Minimum Wage Act 1998 or at a different rate).

The Regulations are intended to permit employers to base their pay structure on the national minimum wage legislation.

Under the National Minimum Wage Act and the National Minimum Wage Regulations, there are three bands: rates for those aged 16 and 17 (£3 per hour), for those between 18 and 21 (£4.25 per hour), and an adult rate for those aged 22 and over (£5.05 per hour).

Regulation 31 allows employers that base their pay structure on the national minimum wage legislation to pay those aged 22 and over more than those aged under 22. However, those under 22 must be paid less than the adult minimum wage, and those aged 18 to 21 must be paid more than those under 18. This is providing those under 18 are paid less than the adult minimum wage. However, the exemption does not allow employers to pay different rates to those in the same age category. It follows that an employer would not be permitted to pay a worker aged 17 £6 per hour (ie, above the adult minimum wage) and a 23-year-old £7 per hour for doing the same work, but would be allowed to pay the 17-year-old £5 per hour.

The TUC, in its response to the consultation, criticised the government's approach. It said that: "The national minimum wage youth development rate constitutes blatant direct discrimination against young adult workers and should be removed. We appreciate that the government is likely to follow the Low Pay Commission's view on the economic justifications for the lower rates, and hence the perceived need for a specific exemption. However, given that the Low Pay Commission recently has not supported the inclusion of 21-year-olds in the youth development rate (and has also cast some doubt on the labour market evidence for 20-year-olds to be included), we do not see how the government could justify this age discrimination if tested in the courts."

Article 6(1)(a) of the Directive countenances "the setting of special conditions on access to employment … including … remuneration conditions, for young people … in order to promote their vocational integration". In its notes on the Regulations, the DTI sets out its justification for the exception, pointing out that the Low Pay Commission's report for 2005 said that: "Evidence suggests that the application of the adult rate to younger people would have adverse employment consequences, given the distinctive features of the labour market for young people."

Regulation 31(2) enables an employer to pay an apprentice who is not entitled to the national minimum wage - because they are under age 19 or in their first year of apprenticeship - less than an apprentice who is entitled to the national minimum wage. The government's justification is that the treatment of apprentices under the national minimum wage legislation is designed to encourage employers to offer apprenticeships to young workers, and the exception "is intended to ensure that this design is not defeated because employers fear the threat of legal challenge on the grounds of age discrimination".

Exception for provision of certain benefits based on length of service

32. -

(1) Subject to paragraph (2), nothing in Part 2 or 3 shall render it unlawful for a person ("A"), in relation to the award of any benefit by him, to put a worker ("B") at a disadvantage when compared with another worker ("C"), if and to the extent that the disadvantage suffered by B is because B's length of service is less than that of C.

(2) Where B's length of service exceeds five years, it must reasonably appear to A that the way in which he uses the criterion of length of service, in relation to the award in respect of which B is put at a disadvantage, fulfils a business need of his undertaking (for example, by encouraging the loyalty or motivation, or rewarding the experience, of some or all of his workers).

(3) In calculating a worker's length of service for these purposes, A shall calculate -

(a) the length of time the worker has been working for him doing work which he reasonably considers to be at or above a particular level (assessed by reference to the demands made on the worker, for example, in terms of effort, skills and decision-making); or

(b) the length of time the worker has been working for him in total;

and on each occasion on which he decides to use the criterion of length of service in relation to the award of a benefit to workers, it is for him to decide which of these definitions to use to calculate their lengths of service.

(4) For the purposes of paragraph (3), in calculating the length of time a worker has been working for him -

(a) A shall calculate the length of time in terms of the number of weeks during the whole or part of which the worker was working for him;

(b) A may discount any period during which the worker was absent from work (including any period of absence which at the time it occurred was thought by A or the worker to be permanent) unless in all the circumstances (including the way in which other workers' absences occurring in similar circumstances are treated by A in calculating their lengths of service) it would not be reasonable for him to do so;

(c) A may discount any period of time during which the worker was present at work ("the relevant period") where -

(i) the relevant period preceded a period during which the worker was absent from work, and

(ii) in all the circumstances (including the length of the worker's absence, the reason for his absence, the effect his absence has had on his ability to discharge the duties of his work, and the way in which other workers are treated by A in similar circumstances) it is reasonable for A to discount the relevant period.

(5) For the purposes of paragraph (3)(b), a worker shall be treated as having worked for A during any period during which he worked for another if -

(a) that period is treated as a period of employment with A for the purposes of the 1996 Act by virtue of the operation of section 218 of that Act; or

(b) were the worker to be made redundant by A, that period and the period he has worked for A would amount to "relevant service" within the meaning of section 155 of that Act.

(6) In paragraph (5) -

(a) the reference to being made redundant is a reference to being dismissed by reason of redundancy for the purposes of the 1996 Act;

(b) the reference to section 155 of that Act is a reference to that section as modified by the Redundancy Payments (Continuity of Employment in Local Government, etc) (Modification) Order 1999.

(7) In this regulation -

"benefit" does not include any benefit awarded to a worker by virtue of his ceasing to work for A; and "year" means a year of 12 calendar months.

Direct discrimination by an employer using age-related pay or benefits will have to be objectively justified, but reg. 32 allows employers to continue to award pay and benefits, such as holiday entitlement, to employees using the criterion of length of service.

The final version of the Regulations strengthens the exemption even further from what was originally proposed. In summary, benefits based on service of up to five years are effectively exempt, since no complaint can be made in respect of any disadvantage resulting from service-based benefits except by employees who have more than five years' service.

In the case of benefits based on service beyond five years, service-based discrimination in benefits will not be unlawful if it "reasonably appears" to the employer that the way the criterion of length of service is used "fulfils a business need of his undertaking (for example, by encouraging the loyalty or motivation, or rewarding the experience, of some or all of his workers)".

The Regulations thus completely exclude anyone with less than five years' service from claiming that they have been indirectly discriminated against on grounds of age as a result of service-linked benefits.

Length of service in this context does not necessarily mean length of continuous service. There are complicated provisions setting out how an employer must calculate length of service if it wishes to take advantage of the exemption. Either the employer must calculate the length of time the worker has been "working for him in total" or it must calculate the length of time the worker has been doing work "at or above a particular level (assessed by reference to the demands made on the worker, for example, in terms of effort, skills and decision-making)". This allows pay or benefits to be based on service in a particular grade, for example.

There are then further provisions that make it clear that the employer must, for this purpose, calculate service in terms of the number of weeks during which the worker was working for the employer, rather than on the basis of the number of hours. However, an employer is entitled to discount the worker's absences from work unless it would be unreasonable to do so, and may also discount periods when a worker was actually at work if those periods preceded a time when the worker was absent and it would be reasonable for the employer to discount those periods.

This does raise the question of which absences it would be "reasonable" to discount. Presumably, it would not be reasonable - and might be unlawful under other discrimination legislation - for an employer to discount absences due to pregnancy or maternity, for example.

Justifying service-based benefits

Provided the employer complies with the statutory requirements, the burden of justifying use of the service criterion appears to be extremely low.

Acas suggests that: "In order to meet these requirements employers would need evidence from which they can conclude there is a benefit to the organisation. This could include information the employer might have gathered through monitoring, staff attitude surveys or focus groups for example."

This seems to be depicting the burden as rather higher than the language of the Regulations indicates. The Regulations do not say that the employer will have to offer empirical evidence demonstrating a particular "business need"; the most likely business needs are already set out in the Regulations. Nor does the employer have to prove that service-based benefits actually achieve any business benefit. It will suffice if it "reasonably appears to the employer" that using the criterion of length of service to award benefits on this basis "fulfils a business need … for example, by encouraging the loyalty or motivation, or rewarding the experience, of some or all of his workers".

The government's notes on the Regulations try to justify the exception in terms of art. 6 of the Directive: "The legitimate aim justifying the retention of service-related benefits is employment planning, in the sense of being able to attract, retain and reward experienced staff. They help maintain workforce stability by rewarding loyalty, as distinct from performance, and by responding to employees' reasonable expectations that their salary should not remain static. The exact formulation of the exempting provisions ensures that the actual award remains proportionate."

The length-of-service exception does not apply to benefits awarded to a worker when they cease employment. Accordingly, it does not cover enhanced redundancy payments.

Exception for provision of enhanced redundancy payments to employees

33. -

(1) Nothing in Part 2 or 3 shall render it unlawful for an employer -

(a) to give a qualifying employee an enhanced redundancy payment which is less in amount than the enhanced redundancy payment which he gives to another such employee if both amounts are calculated in the same way;

(b) to give enhanced redundancy payments only to those who are qualifying employees by virtue of sub-paragraph (a) or (c)(i) of the definition of qualifying employee below.

(2) In this regulation -

"the appropriate amount", "a redundancy payment" and "a week's pay" have the same meaning as they have in section 162 of the 1996 Act; "enhanced redundancy payment" means a payment of an amount calculated in accordance with paragraph (3) or (4); "qualifying employee" means -

(a) an employee who is entitled to a redundancy payment by virtue of section 135 of the 1996 Act;

(b) an employee who would have been so entitled but for the operation of section 155 of that Act;

(c) an employee who agrees to the termination of his employment in circumstances where, had he been dismissed -

(i) he would have been a qualifying employee by virtue of sub-paragraph (a) of this definition; or

(ii) he would have been a qualifying employee by virtue of sub-paragraph (b).

(3) For an amount to be calculated in accordance with this paragraph it must be calculated in accordance with section 162(1) to (3) of the 1996 Act.

(4) For an amount to be calculated in accordance with this paragraph -

(a) it must be calculated as in paragraph (3);

(b) however, in making that calculation, the employer may do one or both of the following things -

(i) he may treat a week's pay as not being subject to a maximum amount, or as being subject to a maximum amount above the amount laid down in section 227 of the 1996 Act;

(ii) he may multiply the appropriate amount allowed for each year of employment by a figure of more than one;

(c) having made the calculation as in paragraph (3) (whether or not in making that calculation he has done anything mentioned in sub-paragraph (b)) the employer may increase the amount thus calculated by multiplying it by a figure of more than one.

(5) For the purposes of paragraphs (3) and (4), the reference to "the relevant date" in section 162(1)(a) of the 1996 Act is to be read, in the case of a qualifying employee who agrees to the termination of his employment, as a reference to the date on which that termination takes effect.

The statutory redundancy pay scheme contains three age bands. Workers aged between 18 and 21 receive half a week's pay for each complete year of continuous service. This increases to one week's pay for each year of service between the ages of 22 and 40, and one-and-a-half weeks' pay for each complete year of continuous service between the ages of 41 and 65.

The government originally took the view that this direct discrimination on grounds of age was inconsistent with the Directive and that the age bands had to be removed. This provoked heated controversy about the appropriate multiplier. The TUC strongly resisted a multiplier of one week on grounds that this would have been contrary to the Directive's principle of non-regression in that some employees would be worse off as a result. The CBI strongly opposed levelling up to a multiplier of one-and-a-half weeks.

In the event, the government decided to leave the bands as they are (the remaining changes to the statutory redundancy pay scheme will be dealt with in part 3 of this series, which focuses on dismissal and retirement).

This decision had knock-on implications for employer-enhanced redundancy payments. Regulation 33 deals with employers that base their redundancy schemes on the statutory scheme, but that are more generous than the statutory scheme requires them to be. The regulation is extremely complicated, so much so that the DTI had to issue the following statement of "clarification": "Regulation 33 allows the employer to either follow the statutory scheme, or to amend it by raising or removing the maximum amount of a week's pay, so that a higher amount of pay is used in the calculation; or to multiply up the appropriate amounts used for each age band in the statutory scheme; or both. Having done this, the employer may multiply the total amount by a figure of more than one, whether he has followed the statutory scheme or amended it as described above.

"If the employer chooses to amend the scheme as described above, he must make the same adjustments to each of the three age bands. He must, for example, apply any increased weekly limit to all three bands, or multiply the appropriate amounts by the same factor for each of the three bands. An employer may of course make different adjustments to the bands if he chooses, but would have to objectively justify this if challenged.

"The exemption also allows an employer to make a redundancy payment to an employee who has taken voluntary redundancy, and an employee with less than two years' continuous employment. In such cases, where no statutory redundancy payment is required, an employer may make a payment equivalent to the statutory minimum payment, or, if they so wish, an enhanced payment as above."

The principle, therefore, is that the exception applies only to employers that make an "enhanced redundancy payment" by following one of the formulae set out above. This is very much a term of art. It requires the employer to use the same age bands as the statutory scheme, and proportionate multipliers from the statutory scheme.

This means that employers that make no reference to age in enhancing redundancy payments, but calculate entitlement on the basis of service, will fall outside the scope of the exception. Similarly, an employer that simply tops up the redundancy payments of employees aged 50 and over would not be covered by the exception. In both examples, the employer would have to objectively justify its practice if challenged on age discrimination grounds. This will certainly require evidence of a different character than that required to satisfy the exception for benefits linked to service discussed above. Somewhat ironically, therefore, the effect of the government's decision may be to force employers that are currently providing enhanced redundancy benefits into tailoring their scheme to the state system, which may either mean larger payments for older employees or smaller payments for younger ones.

¹Age and the workplace: putting the Employment Equality (Age) Regulations 2006 into practice, available from www.acas.org.uk.

Box 1: Age and safety The Acas guide for employers on the age discrimination Regulations lists as one of the potential "legitimate aims" that could justify direct or indirect discrimination on grounds of age: "the health, welfare and safety of the individual (including protection of young people or older workers)". This potential justification is rooted in art. 6(1) of the Framework Employment Directive that allows differences in treatment on grounds of age which are "objectively and reasonably justi-fied by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary", and gives as an example "the setting of special conditions on access to employment and vocational training, employment and occupation, including dismissal and remuneration conditions, for young people, older workers and persons with caring responsibilities in order to promote their vocational integration or ensure their protection". To what extent will health and safety considerations justify discriminating against older workers? A report from the Health and Safety Executive, Facts and misconceptions about age, health status and employability*, emphasises that employers often have inaccurate perceptions about older workers in general and that, in any event, the differences between older workers are such that there is no stereotype that is likely to be true even for most, let alone all, older workers. The report concludes that "these stereotypes/myths cannot be used to justify the exclusion of older workers from the workforce." Extracts from the report are set out below: Myth?: Chronological age determines health and age brings illness and disease This myth is not true. Health is influenced by numerous other factors, particularly lifestyle, amount of exercise and nutrition, and although risk of disease may increase with age, there are many actions which both individuals and employers can take which minimise these risks. Myth?: Getting old is associated with loss of cognitive capacity Some cognitive functions are thought to deteriorate with age. Cognitive functions are mental processes, such as memory abilities, reasoning, thinking, problem-solving, and understanding. However, decline with increasing age is not inevitable. There are vast individual differences in cognitive functions at all ages, and there is some evidence that older workers may be able to prevent or compensate for any decline in these functions. In addition, older adults have some cognitive functions that are more advanced than younger adults and, therefore, have much to offer the currently changing work climate. In addition, the laboratory studies often used to demonstrate losses in cognitive functioning are not representative of the capacities and functioning required in the work environment. Myth?: Older workers have less physical strength and endurance This myth is incorrect. Physical strength and endurance is very specific to individuals; some older workers may be more physically able than their younger colleagues. Physical ability can be improved through exercise or can often be compensated for, and some physically demanding jobs may maintain the muscles required to perform those jobs. Fewer jobs today are physically demanding, and adults choosing those types of jobs are often those who have a higher level of physical ability. Physical demands from work can also often be minimised through changes in work design or use of equipment. Myth?: Older workers tend to have poorer sensory abilities such as sight and hearing Sensory abilities do tend to deteriorate with age. However, this loss is not consistent in all older adults and most sensory loss can either be compensated for or overcome using, for example, aids or adjustments to the workplace. Myth?: Older adults have difficulty adapting to change This myth is not true. Often, any difficulties perceived may be the result of resistance to change and this may occur at any age. Some older adults' reactions to change may result from questions about the need for or value of any planned changes, but resistance to change can be reduced by, for example, effective communication and support. Simple adjustments can also make the changes easier for workers of all ages. Myth?: Older adults find it harder to learn new information making their knowledge and skills outdated This myth is incorrect. Older adults can learn new information, but they benefit, like all workers, from training tailored to their needs. Some older adults may appear to take longer to learn new information, but this is because they have more existing knowledge to filter the new information through. All workers will benefit from a continuous learning environment within organisations, and older adults should be offered training opportunities in the same way as younger workers. Myth?: Older workers take more time off work This myth is not true. Older workers often show lower levels of short-term/non-certified sickness absence than younger workers, which is the biggest source of absence and disruption for employers. On the other hand, older workers sometimes show more long-term/medically certified sickness absence than younger workers, although the chronic diseases thought to lead to long-term absence are often open to prevention by workplace interventions beneficial to all workers. In contrast, employers have less control over the factors associated with short-term absence. Myth?: Older workers have more accidents in the workplace This myth is not true. Accident rates vary in terms of a number of factors, such as type of accident, but in general younger workers have been found to have a higher accident risk. This may be because the more accident-prone individuals have already left the workforce. The accidents associated with older workers, like strains, sprains and falls, can often be prevented by interventions beneficial for all workers, and older workers may help improve organisations' health and safety cultures, as they often take a more responsible attitude to health and safety risks based on their number of years' experience in the workplace. Myth?: Older workers are less productive This myth is not true. Productivity is influenced by a number of factors including, for example, days lost to absence, which has been shown to be lower in older workers. There is great individual variation in ability, and older workers may be able to compensate for any decreases in speed by increases in quality and accuracy. Productivity can be increased by a number of measures that will show benefits in workers of all ages. * Facts and misconceptions about age,health status and employability, Report number HSL/2005/20 (PDF format, 166K).

Box 2: Government forecasts 8,000 claims For every new piece of legislation, the government publishes a Regulatory Impact Assessment (RIA)*. Buried deep in the RIA for the age discrimination Regulations (para. 76) is a prediction as to the number of claims that will be brought. This says: "Based on our expectation for discrimination claims under the other jurisdictions, we assume an average of 8,000 employment tribunal claims per year." By comparison, in 2004-05 - the most recent year for which statistics are available - there were 11,726 sex discrimination claims, 4,942 disability discrimination claims, and 3,317 race discrimination claims. *Employment Equality (Age Regulations) 2006: Regulatory Impact Assessments (PDF format, 580K).

Box 3: Lockstep and age discrimination "Lockstep" is a common system of remuneration for partners in law firms. Under a lockstep system, each partner's remuneration is based on chronological seniority, rather than individual performance. This has the advantage of transparency and, to a large extent, it frees the individual partner from managerial controls. Conversely, lockstep can be seen as having the disadvantage that it severely restricts the ability of the firm to reward high performers and penalise poor performers. Doubtless, it is for this reason that British firms of solicitors have begun to move away from pure lockstep, in some cases introducing a modified system with some performance elements, and in other cases abandoning it altogether. Eversheds recently announced it is to drop its lockstep system and move to a merit-based system. This has been depicted in the legal press as a response to the age discrimination legislation. The Lawyer, for example, reported: "Eversheds is ditching lockstep entirely in favour of merit-based remuneration as it braces itself for the introduction of age discrimination legislation later this year." Eversheds chair Alan Jenkins told The Lawyer that one of the drivers of this decision was the imminent implementation of new age discrimination laws. He is quoted as saying: "There's real doubt as to whether lockstep is lawful under that law." He added, "We wanted a scheme that recognised partners' contributions." Whatever the motives for abandoning lockstep, this legal analysis appears to get the wrong end of the stick. It would be very surprising if a service-based pay system such as lockstep were to be held to unlawfully discriminate against younger workers. As is pointed out in the main article, the test set out in the Regulations is that the employer must show that using a service-based system of distributing (large) profits "fulfils a business need of his undertaking (for example, by encouraging the loyalty or motivation, or rewarding the experience, of some or all of his workers)". That is the whole point of lockstep, and it would be a brave employment tribunal indeed that would, in effect, require a law firm to abandon this system and replace it with some other system, such as one based on some measure of performance. On the contrary, it would seem to be far more risky, in age discrimination terms, to abandon lockstep after 1 October than to retain it. Eliminating lockstep will clearly operate to the disadvantage of older workers, and the law firm will have to justify replacing it with another system in accordance with the test for indirect discrimination. It will have to establish that it had a legitimate aim, and that the means were proportionate. This is a much more stringent test than the test for justifying service-based pay. If moving from lockstep to a performance-based system results in disparate pressure on the older partners to retire, the risk is even greater. Unlike the position for employees, there is no default retirement age for partners in a partnership. Thus, the bottom line is that if you are a law firm planning to replace lockstep with pay based on recent performance, you are well advised to do this before 1 October 2006 and not after.