Ageism laws depend on courts for clarity

With age discrimination claims subject to a drawn-out legal process, it may be quite a while before employers are made aware of the true impact of not complying with new age legistlation.

Billed as the most significant new employment laws for a generation, the Employment Equality (Age) regulations came into force on 1 October 2006.

As to their impact to date, the picture is pretty mixed. Many employers have spent years preparing for these laws and, as a result, the situation is improving for most employees. Other organisations have done little or nothing, and won’t until challenged, and as claims for age discrimination are complicated and drawn-out, it may be some time before they live to regret it.

In recruitment and selection, most of the policy changes have been relatively simple. Employers have, for example, removed age and date of birth requirements from their application forms and now only monitor age in their Equal Opportunity forms. Many have removed references to time-linked experience. Others have made changes to their recruitment processes such as amending websites, training recruitment and selection teams, and changing supplier contracts.

In retirement policy, the majority of employers seem to have opted to use the default retirement age of 65 years. For many, this has involved increasing retirement ages from 60 or 62 years (with associated changes to pension and benefit schemes). A significant number of employers belonging to the Employers Forum on Age (EFA) have opted to manage without a retirement age altogether, anticipating future changes from 2011 onwards. It seems very few employers have decided to introduce a new retirement age at 70 or 75 years.

Encouragingly, a significant number of employers are choosing to give a reason for saying ‘no’ to a request to continue working. Although this isn’t required in the legislation, it is something we recommend at the EFA. It has been universally agreed by leading employers, that simply refusing to discuss why you don’t wish to keep an employee on when they have worked for you for many years is bad for employee relations, and is poor employment practice.

Larger organisations, with more sophisticated redundancy and benefits packages, have had a much more difficult time complying than others. Redundancy, in particular, has caused lots of headaches. Few large employers have schemes which exactly mirror the statutory redundancy payment scheme as required by the new law. Many employers had already changed schemes to service-only compensation, anticipating that age bands would be made unlawful in the new regulations. The majority of those with service-only schemes now plan to attempt to objectively justify them. Other employers have, or are in the process of, trying to negotiate amendments to their schemes with unions and employee representatives.

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Where benefits are concerned, employers’ policy responses are not always so positive. While most service-related benefits are being retained (even those over five years including sick pay, annual leave and long service awards), it is a different story with insurance, and insured benefits particularly. Without exemptions, the high cost of insuring older workers is having a knock-on effect in both reducing opportunities to work for those over aged 65 years, and on employee benefits packages in general. We have already heard reports of group critical illness and medical schemes being cancelled. This may also be one of the reasons why so many organisations have opted to use the default retirement age. Employers have effectively been forced to retire people at 65 years because of burdensome additional insurance costs.

Inevitably, it is going to take some time before we know whether UK employers have really undergone a transformation and the laws have successfully stamped out ageism, or whether employers have simply got smart enough to hide ageist practices. Similarly, it will take some time to work out whether these laws have actually improved opportunities for people of all ages or made things worse. In the meantime, it’s a case of watch this space.