22 July 2005
The draft regulations relating to age discrimination were published on 14 July 2005. They are due to take effect on 1 October 2006. There is now a period on consultation on the draft regulations ending in October 2005.
Listed below are some of the main areas of the employment relationship that are likely to be affected by the new legislation, the liabilities and the potential claims:
- Retirement ages under 65 will be unlawful unless objectively justified
- Employees age 65 and over will have the right to claim unfair dismissal (retirement as a reason for dismissal can be challenged)
- Employees will have the right to request to work beyond retirement. Failure to follow statutory process in respect of any request may result in unfair dismissal claims and additional awards of 8 weeks (capped) pay
- Evidence that the dismissal is for a reason other than retirement may result in 50% uplift on unfair dismissal compensation (because the correct statutory dismissal procedure will not have been followed)
- Under 18’s and over 65’s will be entitled to redundancy pay (based on up to 20 years’ service and calculated in accordance with any contractual scheme)
- LIFO selection for redundancy – unlawful unless objectively justified
- Incremental pay structures that exceed a 5 year period – may be unlawful
Treatment of pensions:
- The operation of occupational pension schemes should be largely unaffected, as exemptions will exist for age restrictions imposed on the admission to schemes and entitlement to benefits
- All occupational pension schemes will have an implied non-discrimination rule and a power to change scheme rules where this is difficult
- It appears that there is an intention to exempt employer contributions to personal and stakeholder pensions from the regulations but this remains unclear.
The transitional provisions are unclear at the moment, but if the regulations apply to retirements taking place on or after 1 October 2006, then it may be necessary to commence statutory retirement procedures no later than March 2006, to avoid unfair dismissal claims. Organisations should therefore:
- Audit for possible retirement dates due to fall on or after 1 October 2006 and for a period of 6 months thereafter
- Audit all policies, procedures and practices to identify criteria for access to, or provision of, pay, benefits, employment, promotion and training opportunities, so that steps can be taken to amend or defend any discriminatory practices. In particular look for age, service, experience and qualification related criteria
- Implement anti-harassment policies to cover age harassment
- Start to train managers. Evidence of an ageist culture prior to October 2006 may be used as evidence in claims post October 2006
Health warning: this document reflects the draft age regulations and the "Coming of Age" consultation paper, which may change prior to October 2006. Advice should be sought on individual cases and situations.