Martha How: All employers are aware of the new age discrimination legislation, and many have been reviewing their policies in respect of pensions, redundancy, recruitment, training and promotion. But there are also some subtler issues that employers are addressing – among these are job descriptions that reference the number of years’ experience required for the job.
In the arena of non-pension benefits there are some tricky issues we have been grappling with. The two most pressing questions we encounter are: Firstly, can age-related pricing scales for benefits offered under flexible benefits schemes (for example, critical illness) be defensible under the definition of “objective justification” in the [Employment Equality (Age) Regulations]? An actuarial justification should be strong enough but is it really? And secondly, is it acceptable for an employer to operate age-related thresholds to benefits such as disability or life cover that are provided by their insurers? To remove this benefit would be detrimental to all staff which is surely against the spirit of the legislation – so should employers continue to provide this “discriminatory” benefit or not?
As far as we know, neither have been tested in court. In both instances, the employer is simply passing on the terms included in an insurance policy provided by a third party. The insurers as “providers of goods and services” are exempt from the legislation but employers are not.
The government [in the long term] intends for the legislation to also apply to suppliers of goods and services and, if this happens, the whole risk industry would have to revise pricing and practice. While employers have a more onerous duty than suppliers, we hope that common sense would prevail if any of these cases come to court. We are calling for some simple clauses to refine the legislation – to provide safeguards for employers who are “stuck in the middle”. A neat clause exists in the sex discrimination legislation that legitimises the differential pricing of insured benefits between men and women. There is a need for a similar clause to apply here.
A number of bodies including the Association of British Insurers, The Employers Forum on Age and Group Risk Development (GRiD) are engaging the Department of Trade and Industry in this debate. Let’s hope employers are heard.
Martha How is head of reward consulting at Hewitt Associates