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Introduction of age discrimination law 1 October 2006
Age discrimination and retirement
1 October 2006 the Employment Equality (Age) Regulations 2006 come. into force. They will apply to all employers, regardless of how many people they employ. Discrimination against someone or a group of people, on the grounds of their age or apparent age – whether because they are too young or too old, will be unlawful. Also, employees will have a statutory right to request to continue working after their normal retirement date or 65 and a dismissal because of retirement may be unfair. The upper age limits for bringing an unfair dismissal claim and entitlement to a statutory redundancy payment will go.
The Regulations are complicated, the drafting is not always clear and, as with new legislation, judicial guidance will be necessary. In the meantime though, here’s a brief overview.
Discrimination
The age discrimination provisions broadly follow those dealing with other types of discrimination, such as religion. Age discrimination will not just apply to employees but also to workers and other individuals, performing services personally, again, in line with other discrimination legislation.
Discrimination will occur at all stages of the employment relationship, before (applications, interviews, terms of offer etc) during (promotion, training, detrimental treatment and dismissal) and afterwards.
There are four types of discrimination – direct, indirect, harassment and victimisation:
• direct discrimination – this is where the employer treats someone less favourably because of his or her age (or apparent age) and cannot justify it objectively. It is in this respect that age discrimination differs from other forms of direct discrimination which cannot be objectively justified).
• indirect discrimination – this happens when someone is disadvantaged by a provision, criterion or practice which the employer cannot objectively justify.
• harassment - this is unwanted conduct that violates a person’s dignity or creates an intimidating, hostile, degrading, humiliating or offensive environment for that person.
• victimisation – this is less favourable treatment which happens because someone has made a complaint or allegation or given evidence in relation to an age discrimination complaint.
Objective justification is defined as a "proportionate means of achieving a legitimate aim". Really, this is a question of looking at what the less favourable treatment or the provision etc. is, deciding whether it is there to bring about a reasonable need and whether this could be done in another, less discriminatory way. For example, economic factors such as business needs and efficiency may be legitimate aims but saying that it would be more expensive not to discriminate is not in itself a proportionate way of achieving that aim!
As with other forms of discrimination, there are some exceptions. These are the main ones:
• discrimination in the arrangements for offering employment and refusing to offer employment if the applicant is older than the employer’s normal retirement age or 65 or will be older within six months of the application.
• where age is a genuine occupational requirement which it is reasonable to apply in the particular circumstances.
• applying the national minimum wage.
• termination of employment on the grounds of retirement subject to the employer considering a request to work beyond retirement age (see below).
Retirement
From 1 October there will be a default retirement age of 65. Employers can either rely on the default retirement age or have their own normal retirement age. There is no problem with a normal retirement age of 65 or above but if the normal retirement age is below 65, e.g. 60, the employer will have to justify it objectively.
Employers will be under a legal obligation to consider their employees’ requests to carry on working, but not to grant them. For a retirement dismissal to be fair, the employer will have to follow certain statutory procedures. There are simpler, transitional provisions relating to retirements before 1 April 2007.
For retirements between 1 October 2006 and 31 March 2007, there are two possible scenarios - either the employer gives the employee notice before 1 October or does so after that date. If the employer gives notice before 1 October, it must give the employee written notice of at least the length required to terminate his or her employment contract or, where that notice is longer than four weeks, at least four weeks’ notice that he or she is to be retired. Then, on 1 October or as soon as possible afterwards, the employer must write again to the employee, informing him or her of his or her right to request to continue working. The employee can then make a request to do so, up to four weeks after the termination of the employment.
Between 1 October and 31 March 2007 employers must give either statutory or contractual notice (if longer) to terminate the contract of employment. That notice must give the intended retirement date and inform the employee of his or her right to request not to retire and to continue working.
An employee who wants to exercise his or her right must make a written request, where possible four weeks before the intended retirement date, or as soon as reasonably possible after having been notified of the right. Again, the request can be made up to four weeks after the termination of the employment.
If agreement cannot be reached in the meantime, the employer must hold a meeting with the employee who can be accompanied by a colleague or trade union representative and, if the request is declined, the employee can appeal. An appeal meeting should then be held.
After 1 April 2007, the full procedure will come will come into effect. Employers will have to notify their employees of the intended retirement date between six months and one year beforehand. If they fail to do so, the employee may receive compensation from the employment tribunal of up to eight weeks’ pay (capped in the same way as the basic award or a redundancy payment).
However, the employer’s duty to notify the employee is continuing and if the employer fails to notify with in the time limits above, it can still do so up to two weeks before the intended retirement date. Failure to notify after this date will render the dismissal unfair.
The notice must give the intended retirement date and inform the employee of his or her right to request not to retire and to continue working.
Employees who have been properly notified must make their request to continue working between three and six months before the intended retirement date. If they have not been given notice in time, they can still make a request at any time before their dismissal. If they do so, the employment must continue until the day after their employer notifies them of the decision on the request.
Again, if agreement cannot be reached, a meeting should be held. Employers must meet their employees within a "reasonable" time, discuss the request and inform them of their decision afterwards. An employee may appeal against the decision if the employer refuses the request outright or accepts it but with a shorter period than that requested. If an employee appeals, an appeal meeting should be held. The employee has a right to be accompanied at any meetings.
This procedure must be repeated each time an employee nears the agreed extended point for retirement, unless the agreed extended period is less than six months.
Dismissal, unfair dismissal and redundancy
If the employer does not have a retirement age or if the employer "retires" an employee before its normal retirement age, retirement cannot be the reason for the dismissal and the employer may face a claim of unfair dismissal. This will also be the case if the employer’s normal retirement age is below 65 and has not been objectively justified.
Employers who follow the statutory procedure correctly may rely on the default retirement age or the normal retirement age and those dismissals will be considered fair. The statutory dismissal procedure does not apply to retirement.
The dismissal will be automatically unfair if the employer fails to follow the statutory procedure or fails to notify the employee at least two weeks before the dismissal.
The present age limits for claiming unfair dismissal and a redundancy payment will be abolished, and, the taper at the age of 64 will be removed. Employees of all ages (not just between 18 and 65) will be entitled to a statutory redundancy payment, if they are made redundant.
Pensions and service related pay and benefits
Pension rights accrued before 1 October will not be affected. The Regulations aim to disrupt existing arrangements as little as possible. There are a wide range of exemptions but where there is an age-based rule that is not covered by an exemption, that rule will have to be objectively justified or removed. Although employers will no longer be able to set a maximum age for contributions, they will be able to set a maximum number of years of pensionable service.
Employers will be able to continue to use length of service criteria as long as service is not more than five years. After that, employers will have to objectively justify any service related pay and or benefits.
Steps to be taken
Employers:
• familiarise yourselves with the retirement provisions so you are not caught out.
• Check your existing procedures, policies and pension schemes to make sure that they do not fall foul of the new provisions; and
• if in doubt, take bespoke professional advice.
The DTI has published some fact sheets and the ACAS guide "Age and the Workplace" is really helpful with a flow chart for fair treatment on retirement and sample draft letters. It can be downloaded from http://www.acas.org.uk/media/pdf/d/t/6683_Age_and_the_Workplace_AWK.pdf
