Age discrimination is alive and well and happening in a workplace near you. A year after it became illegal, over half (59 per cent) of the people responding to a recent survey said they were aware of age discrimination in their workplace. A quarter (27 per cent) had worked somewhere where age was a determining factor in recruitment over the previous 12 months, while almost a third (30 per cent) had seen people of different ages doing the same jobs being managed differently.
The survey, commissioned by the Employers Forum on Age (EFA), also found that the overwhelming majority (89 per cent) of respondents were aware that it’s illegal to discriminate against people on grounds of age in employment. Yet this high level of awareness hasn’t so far translated into the flood of discrimination claims that some commentators were predicting this time last year. Many of the cases reaching employment tribunals have revolved around the retirement process set out in the age regulations, and we have yet to see any high-profile claims against employers for sacking people for looking too old, bullying individuals because of their age or other blatantly ageist behaviour. But this doesn’t mean that employers can afford to be complacent.
Pointing out that it was inevitably going to take time after the legislation was introduced for cases to come before tribunal, EFA chief executive Sam Mercer says: “One of the things that employers really have struggled with in the first year has been that they heard varying strong messages about the need to tackle age discrimination. Then when they failed to see a rush to employment tribunals there was a perception that it had all been a storm in a teacup, and I think that is gradually going to change.”
Figures from the government’s Tribunals Service suggest that this change could already be under way. While there were only 972 age discrimination claims in the year ending 31 March 2007, compared with 5,533 for disability discrimination and a massive 28,153 for sex discrimination (many accompanying equal pay claims) during the same period, by the end of June the number of age claims had jumped to around 1,500. Since then they have been running at roughly 200 a month, bringing the total close to 2,000, according to a Tribunals Service spokeswoman.
The CIPD’s employment law helpline has also seen a noticeable increase over recent weeks in the number of calls about age issues, especially the new retirement procedure that only came fully into effect in April this year. The volume of queries about age discrimination handled by the helpline now ranks second only to those about disability.
Employment lawyers are divided over whether the number of age claims is set to keep on growing. “My sense is that it probably won’t,” says Richard Arthur, a partner in the employment rights unit of Thompsons Solicitors. “That’s down to a number of factors, perhaps the most important of which is that it’s just so complicated to work out whether something is discriminatory on grounds of age and, in particular, whether or not it is capable of objective justification.”
On the other hand, James Davies, joint head of the employment and incentives department at Lewis Silkin, recalls that initially the disability discrimination legislation was also slow to take off. He is convinced that we will see a similar pattern with age claims. “We are getting far more queries from our clients on a day-to-day basis than we were in the first few months after the legislation came into force, and when we have some significant reported decisions then that will probably increase,” he says.
One possible reason why there haven’t been more reported decisions so far is that people are waiting for the outcome of a legal challenge to provisions in the legislation allowing employers to retire staff at 65 – provided they follow a set procedure. Heyday, a membership organisation backed by the charity Age Concern, has taken the UK government to court, claiming that these provisions are incompatible with EU law. The case has been referred to the European Court of Justice, which is not expected to give its ruling until 2009. If it goes in Heyday’s favour, the government, which has already promised to review the default retirement age of 65 in 2011, may have to scrap it altogether. A Heyday victory could also lead to a big increase in claims from people who have been forced to retire at 65.
Meanwhile, an employment tribunal has rejected a request to put a claim on hold pending the outcome of the Heyday challenge. The claimant in Johns v Solent SD Ltd (ET 3100414/07) had been retired by her employer when she reached 65 and argued that this was both unfair dismissal and age discrimination. The tribunal disagreed, saying that private-sector employers, such as hers, were entitled to rely on the regulations in their current form. But other tribunals are taking a different view, according to Nony Ardill, legal policy adviser for Heyday. “We’ve heard of quite a number of people asking tribunals to adjourn their applications until the [Heyday] case is decided,” she says. “A lot of tribunals are saying ‘fine, we’ll put the whole thing on the backburner’, so we have got cases lining up behind our case.”
Some of the cases that have already been heard underline the importance of sticking to the letter, as well as the spirit, of the statutory retirement process. In Holmes v Active Sensors Ltd (IDS B835/12), for example, a tribunal found that an employee’s request to continue working past 65 did not comply with the law because he had not referred to exactly the right paragraph in the regulations.
The focus on retirement in many of the cases that have reached tribunals so far shows that the government has misjudged the public mood, says Freda Line, diversity adviser at the CIPD, which has called for the removal of the national default retirement age. “I think what surprised the government was the number of leading employers, including some government departments such as the Department for Work and Pensions and the Foreign and Commonwealth Office, that removed their retirement age,” says Line. “The government should take a lead from its own major departments. That would deal with the Heyday challenge... and make life easier for employers.”
Ironically, the Department for Business, Enterprise and Regulatory Reform, which has taken over the former Department for Trade and Industry’s responsibility for the age regulations, is among those that still have a mandatory retirement age, though it is planning to review this early in 2008. If the department does scrap its current retirement age of 65, it is unlikely to find that this spells the end of civilisation as we know it. Certainly, BT, which has already got rid of its compulsory retirement ages, doesn’t seem to have run into too many problems. Although the telecommunication giant’s move was triggered partly by the legislation, it had already been reviewing its retirement age of 60 in the light of changing demographics and the wishes of its workforce. “We are seeing an increasing number of people staying on in their sixties, which we wouldn’t have had previously, so after only a short time we now have 1 per cent of our workforce over 60,” says senior people and policy manager Becky Mason.
If this trend continues, more employees in future will qualify for long service awards, which BT currently gives to those with 25, 30 and 35 years’ service. “On the face of it that’s discriminatory [against younger workers] but it’s something we didn’t want to take away from our employees and which we will look to justify should we ever be challenged on it,” says Mason.
Concerns about the legality of long service awards, and other service-related benefits, have led to calls for changes to the age regulations. Ben Bengougam, group HR director for the electrical retailer DSGi, makes the point that the legislation was intended to root out age discrimination – not to stop organisations from rewarding long service, loyalty and commitment. “It is my hope that we get to the point where the legislation is reviewed to take this into account,” he says.
DSGi has replaced its long service awards with “loyalty and retirement” awards, as well as overhauling redundancy policies, which gave long-serving employees the right to enhanced redundancy payments.
Employee benefits based on up to five years’ service are exempt from the age regulations. But this exemption doesn’t apply to enhanced redundancy pay, which is turning out to be one of the trickiest aspects of the regulations for employers. The statutory redundancy pay scheme, which gives employees in different age bands the right to different levels of redundancy pay, remains in place. But only enhanced redundancy pay arrangements that mirror the statutory scheme – which very few do – are lawful. Other schemes linking redundancy pay to length of service will need to be objectively justified if they are challenged – and it’s far from clear how employment tribunals will view these schemes.
“We just don’t know whether they will be justified or not, and that’s causing quite a lot of concern for employers,” says James Davies of Lewis Silkin. “There have been a series of legal challenges which, as far as I’m aware, have either been settled – sometimes at quite significant cost – or are still outstanding.”
Arguing that the government hasn’t thought this issue through, Davies says that the legislation has had other unintended consequences. In particular, employers who want to employ people beyond 65 are finding that this results in group premiums for medical cover and other insured benefits going through the roof. But if employers deny these benefits to older workers, they could end up being sued. Davies suggests two possible ways out of this impasse: extending the regulations to cover insurers, or allowing employers to offer the over-65s financial payments equivalent to the value of insured benefits given to younger workers.
The Employers Forum on Age has also called on the government to change the law, warning that the regulations, in their present form, could spell the end of many insured benefits. “We’ve got research showing that employers are converting policies that used to run until retirement age to, say, a five-year fixed term, or they are buying out those benefits altogether,” says Sam Mercer. “That’s happening in a very limited way but it’s a definite trend that the insurance industry has noted.”
But the problems that have surfaced over the past 12 months, coupled with evidence of continued age discrimination in the workplace, do not necessarily mean that the regulations have been a failure. According to Stephen Williams, head of equality at Acas, the new law has had a positive effect, prompting employers to look more closely at the abilities of employees and potential employees, rather than their age or how many years’ experience they have. “Of course it’s still very early days,” he says. “A year isn’t a long time in terms of equality and equality legislation because so much of it is about people’s knowledge and perceptions of the issues, and these take a long time to develop in the workplace.”
Attitudes are likely to be especially slow to change in smaller organisations. An Acas survey, carried out six months after the regulations came in, showed that only 17 per cent of the 750 small businesses polled had amended their employment and recruitment practices. But as Giles Tulk, a director in the management and employee reward team at PwC, stresses, smaller businesses tend to follow the lead of FTSE-100 companies, and most of these have gone to considerable lengths to comply with the legislation. “We’ve seen a big increase in job evaluation and grading work, which has underpinned organisations’ efforts to check that they are treating groups of employees fairly,” he says. “None of our clients has faced any claims and I think that’s because a lot of them have been doing this organisational audit work.”
But major employers aren’t breathing a big sigh of relief just yet. DSGi is among those that have taken a long, hard look at their HR policies and given all managers the training they need to comply with the regulations. These efforts have paid off, in that the company has not had to defend any age discrimination claims. “We’ve gone though some fairly hard transactions in selling parts of our business... and we haven’t yet had one claim,” says group HR director Ben Bengougam. But he probably speaks for many other senior HR practitioners when he adds: “I’m touching wood with all my fingers as I say that!”
How Tesco reacted to the age legislation
Tesco prided itself on its age-neutral approach even before the regulations came into force. “But the detail of the legislation has meant that we have had to review quite a few areas of our business,” says Sharon Kyle, project manager for the retailer’s diversity programme, “Everyone is welcome at Tesco”. She gives the example of the “privilege card for life” for which any employee aged 55 or above who retired after 20 years’ service was eligible. “We’ve managed to retain that but we’ve changed the criteria so that we now have a combination of age and length of service which need to add up to 80 years but it can be any combination,” explains Kyle.
Other areas that were reviewed include Tesco’s student website, which was arguably geared towards a young audience, and has now been redesigned to ensure it is not seen as discriminatory. The retailer, which has long had a “working beyond retirement” policy and recently put all its 20,000 line managers through a workshop to help them manage this issue with confidence, is still debating whether to stop asking job candidates for their date of birth. Other employment practices are also under review.
“We are of the opinion that this will be an area of legislation, and an area of diversity, that will continue to evolve as mindsets change,” says Kyle. “But for us the biggest impact and the biggest challenge has been around our service-related and long-service benefits.”
What the law says about age discrimination
Under The Employment Equality (Age) Regulations 2006, it is against the law to:
• directly discriminate against people because of their age – for example by refusing to employ, promote or train them – unless this can be “objectively justified”;
• indirectly discriminate on grounds of age – for example, by applying policies that disadvantage particular age groups – unless, again, this can be justified;
• harass people because of their age;
• victimise anyone who complains of age discrimination.
The regulations have also:
• removed upper age limits for making unfair dismissal claims;
• introduced a default retirement age of 65 and made compulsory retirement below that age unlawful unless it can be justified;
• given employees the right to ask to work beyond 65 or any other retirement age set by their employer, who has a duty to consider these requests.
However, employers can still:
• refuse to employ people within six months of their retirement age or 65 if the organisation does not have one;
• offer benefits based on up to five years’ service.