Age discrimination FAQs
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At our recent HR Directors Club workshop event ‘Age discrimination – no longer a grey area?’, in association with Hammonds, members shared their key concerns around the legislation.
Here Hammonds answer some questions on this hot topic.
Are there any circumstances in which we can treat employees less favourably on grounds of age?
The Age Regulations will allow employers to treat employees less favourably on grounds of age if they can show that such treatment is a "proportionate means of achieving a legitimate aim". In other words, they will have to have a very good reason for doing so!
There are a variety of aims that a tribunal may consider to be legitimate. These include (but are not limited to) steps taken:
(i) to protect the health, welfare and safety of younger or older employees;
(ii) to facilitate employment planning;
(iii) to meet particular training requirements;
(iv) to encourage and reward loyalty;
(v) to ensure a reasonable period of employment before retirement; and
(vi) to recruit or retain older people.
In order for an aim to be “legitimate”, it must correspond with a real need on the part of the employer. It is unclear to what extent cost will be a legitimate factor for employers to take into account. In Cross v British Airways plc [2005], a sex discrimination claim, the EAT suggested that cost saving alone could not amount to a legitimate aim, but that it could be taken into account along with other legitimate aims in determining whether or not particular treatment is justified.
Having established a legitimate aim, an employer will then have to go on to show that the means of achieving it are proportionate. In order to be proportionate it must actually contribute to the pursuit of the legitimate aim. So, for example, if an employer argues that the aim of its policy is to encourage loyalty it must be able to demonstrate that the policy in question actually does this. It will not be enough to simply make assertions – some evidence will be required. In considering proportionality, a tribunal will also weigh up the importance of the aim against the discriminatory effects and will consider whether the aim could be achieved equally well by a measure that has a smaller discriminatory effect or does not discriminate at all.
The Age Regulations also contain a number of specific exemptions.
Can we still fix our own retirement ages?
Yes, up to a point. The Age Regulations do not mean that compulsory retirement ages will be unlawful per se.
Employers will still be able to set their own retirement ages, but if they are below the national default retirement age of 65 then any dismissal for retirement under that age will be unlawful under the Age Regulations unless it can be justified. It is fair to say that employers will have to put forward some pretty strong reasons to justify a lower retirement age.
If the retirement age is at or above the default retirement age of 65 then any retirement dismissal will not be unlawful under the Age Regulations, though it may still be unfair or discriminatory on other grounds.
Whether or not the dismissal is fair under the Employment Rights Act 1996 will depend to a large extent on whether or not the employer has followed the new retirement procedure.
What changes, if any, should we make to our recruitment and selection procedures?
Employers should carry out an audit of their recruitment and selection policies and procedures, as these are areas where age discrimination may inadvertently creep in. Almost 30% of advertisements recently placed in one national newspaper would breach the Age Regulations according to an audit carried out by consultancy, Water for Fish. These included advertisements that asked for a certain number of years’ experience or used words such as “energetic” or “mature”. There are a number of points that employers should consider, including:
(vii) exercise caution when drafting advertisements to ensure they do not indirectly discriminate against particular age groups. Employers should avoid age, age-related or age ranges such as "job applicants should be between 25 – 35 years of age" as well as stereotypical language. Phrases such as "young" or "more mature candidate" should also be avoided as these can be used as a means of indirectly imposing age limits on job applicants. Whilst asking for a candidate's date of birth will not in itself be unlawful, it may give an impression that an employer will discriminate on grounds of age and so should be avoided before the offer stage.
(viii) be careful about stating that a candidate has to have a certain number of years’ experience as this may indirectly discriminate against particular age groups not old enough to have it. They should also consider whether their application forms ask for unnecessary information about periods and dates.
(ix) think about how and where they advertise. Employers should not confine advertisements unjustifiably to those publications/places that could exclude or disproportionately reduce the number of candidates of a particular age or age group, e.g. the broadsheet newspapers or certain online sites.
(x) ensure that application forms and job descriptions are objective and focus on the nature of the job and the skills required. Avoid insisting on particular qualifications such as "only people with GCSE English need apply" as these would potentially exclude individuals who left school before GCSEs were introduced.
(xi) ensure that any individuals involved in the selection process have been given training on the effect that generalised assumptions and prejudices can have on selection decisions and the need to avoid basing employment decisions on such assumptions. Wherever possible, short-listing should not be done by one person alone, so as to minimise the risk of bias or prejudice.
(xii) ensure that any health requirements can be justified. Employers should not make assumptions about an individual's capability based on age e.g. only seeking medical references in respect of employees over 50.
(xiii) ensure that contemporaneous notes of interviews are taken and kept together with a record of why a candidate was or was not appointed, as these could be useful if the decision to reject a candidate is subsequently challenged.
What changes, if any, should we make to our contractual redundancy scheme?
Redundancy schemes usually contain a number of age-related features. Employers should review any redundancy policy in light of the Government's proposed changes to the statutory scheme to ensure it is age-compliant. In particular they should ensure that:
(xiv) any lower or upper age limits on payment entitlements are removed unless there is a good reason for them;
(xv) any selection criteria are objective and non-discriminatory. In particular, age should not be used as a criterion for selecting employees for redundancy. Furthermore, employers should be aware that a "last in/first out" policy is likely to affect a greater number of younger employees and therefore may indirectly discriminate on grounds of age.
The Government is preserving the two-year qualifying period for entitlement to a statutory redundancy payment, the requirement to take into account the employee's length of service when calculating any such payment and the multiplier based on wide age brackets. Any contractual scheme will remain lawful to the extent it mirrors these requirements.
Furthermore, an employer will still be able to take age-related factors into account when calculating enhanced redundancy payments, provided that the scheme is based on the statutory scheme. In order to qualify as an enhanced redundancy payment (and thus be covered by this exemption) employers will have to calculate any payment in accordance with the statutory scheme (i.e. base it on age, length of service and pay) save that they will not have to restrict themselves to the cap on the amount of a week's pay and they will be able to multiply the number of weeks’ pay for each year of service and/or the total amount of the payment by a figure of more than one. Employers do, however, need to be careful as the exemption has been narrowly drafted and many schemes will fall outside it.
Can we still link pay and other benefits to an employee's length of service?
Many employers link pay and other benefits (such as holiday or sick pay) to an employee's length of service. The Government recognises that such practices are widespread and that they can fulfil a useful purpose. There is, therefore, a specific exemption built into the Age Relegations preserving the right of employers to offer such benefits on this basis. However, if employers provide benefits based on length of service of more than 5 years they will have to show that it “reasonably” appears to them that their use of length of service “fulfils a business need of [their] undertaking (for example, by encouraging the loyalty or motivation, or rewarding the experience of some or all of [their] workers)”. The Explanatory Notes that accompany the legislation do not give any guidance on what employers will have to show in practical terms to satisfy this test, but the Government appears to be trying to make it as easy as possible for employers to continue to offer benefits on this basis.
Can we still run a graduate recruitment scheme after 1 October 2006?
Such schemes will not in themselves be unlawful but clearly criteria for entry to the scheme may discriminate (either directly or indirectly) against candidates on grounds of age. For example, a requirement that an entrant be no older than 25 or have no more than three years' post-graduate experience would indirectly discriminate against older workers and would therefore have to be objectively justified.
Employers will also have to be careful about restricting their recruitment process to the university “milk rounds”, as the majority of students who attend these events are young graduates. The ACAS Code of Practice recommends that employers enhance any “milk round” programme with a broader recruitment strategy, using other avenues to capture a wider pool of applicants of differing ages.
How much detail do we need to provide when informing an employee of our decision to reject his application to work beyond the intended retirement date?
There is no provision governing how much information employers need to provide. The Age Regulations state that where the decision is to refuse an employee's request, the employer should confirm its intention to retire the employee, and set out the date on which the dismissal will take effect together with details of the appeal procedure. The Age Regulations do not require the employer to expressly state its reasons for turning down the request, although clearly from an employee relations point of view it may be difficult to get away with saying “no” and nothing more.
The ACAS Guide provides that: “Giving reasons and a more detailed explanation of your retirement policy may enable the employee to leave with dignity and respect and help you maintain good workplace relationships with other employees”. But this does not mean that strictly legally you have to do it.
If we cannot reach agreement with an employee concerning a request to work beyond the intended retirement date, what remedies will he have?
The aim of the legislation is to encourage dialogue between employers and employees. An employee will only be able to bring a complaint in the tribunal in limited circumstances. He will be able to bring an unfair dismissal claim, although if it is a genuine retirement and the employer has complied with the duty to consider procedure then his claim will be unsuccessful.
Depending on the age at which the employee is retired (i.e. if below 65) he may be able to bring a complaint of unlawful discrimination under the Age Regulations.
In addition, an employee will be entitled to up to 8 weeks' pay if his employer fails to inform him of his intended retirement date and of his right to request working no later than six months before the date of dismissal.
Unlike the Flexible Working Regulations, a tribunal will not have the power to order an employer to reconsider a request.
Will we have to monitor the age profile of our workforce?
There is nothing in the Age Regulations that requires employers to obtain this information, either from their existing workforce or from job applicants. Having said that, it may help employers if they collate such information, as it will not only assist them when drafting policies and procedures but it will also help them understand the needs of their workforce and whether or not particular age groups are under-represented in the workforce.
The collection of such data may also assist employers if a claim of discrimination is brought against them since the information would help to demonstrate their commitment to ensuring genuine equality of opportunity, and permit them to respond more fully to any questionnaires.
If employers decide to obtain such information they should consider how they are going to collect it. If they already carry out other forms of monitoring e.g. on sex and ethnic origin, it may be easy to include questions about age. Employers should make clear to their employees the reasons for collecting such data and how it is going to be used.
In order to achieve the full commitment of all concerned it would normally be advisable to discuss the chosen method, the reasons for collecting such data and how it will be used with trade union representatives or employee representatives. Clearly employers should ensure that such information is only obtained for the purposes of monitoring alone and is protected from unnecessary disclosure and other misuse.
30 May 2006
