James Davies, Partner and joint Head of Employment and Incentives at lawyers, Lewis Silkin busts the jargon and offers some practical advice for HR professionals looking to comply with the forthcoming age discrimination regulations.

The government has now published draft Regulations which will make age discrimination unlawful. It is likely that (following a period of consultation) the Regulations will come into force on 1 October 2006. This article summarises the basic principles of the Regulations and considers practical advice for HR professionals in the run-up to October 2006.

Retirement:
Possibly the biggest impact of the Regulations is on retirement. The Regulations provide for a default retirement age of 65. This means that any retirement age below 65 will be unlawful unless it can be objectively justified. Objective justification is likely to be difficult and will require evidence rather than simple assertions.

If an employer retains a retirement age of 65 or dispenses with a retirement age altogether, then it is obliged (in every case) to follow a ‘planned retirement’ procedure before it can retire an employee. In summary the procedure requires that:

• The employer gives the employee between six-12 months notice of retirement.




• The employer notifies the employee that they have a right to request to work beyond the retirement date.




• If the employee wishes to make a request, they do so no later than six weeks and no sooner than 12 months before the retirement date.




• The employer meets with the employee to discuss the request.




• The employer has a duty to consider the request and must let the employee have a decision within two weeks of the meeting.




• The employee has a right to appeal.

The employer is not obliged to give reasons for refusing an employee’s request but must comply with the ‘planned retirement’ procedure.

The Regulations amend Unfair Dismissal legislation to accommodate age discrimination. ‘Retirement’ is introduced as a potentially fair reason for dismissal and the upper age limit is removed. A failure to follow the ‘planned retirement’ procedure will make a dismissal unfair.

The Regulations provide that following the ‘planned retirement’ procedure will make the retirement fair. However, it may be possible to argue that ‘retirement’ is not the real reason for dismissal and that the dismissal is therefore unfair.

Practical points:
If you have a retirement age of under 65, review it urgently. Consider whether you have evidence that a retirement age of less than 65 is objectively justified.

If you have a retirement age of 65 (or have no retirement age at all) take steps to put in place a ‘planned retirement’ procedure. Start educating managers about the need to comply with the procedures in every case.

Think about what will be the relevant considerations for your organisation when considering an employee’s request to work beyond the retirement date.

Be consistent in managing retirement and be specific that retirement is the reason for dismissal.

Recruitment:
The Regulations make it unlawful to discriminate (directly or indirectly) against any age group.

Direct discrimination will be an issue in two cases. First, where an employer sets an age limit for a particular job; and secondly, where a candidate claims that the reason that they were rejected was age.

Unlike other forms of discrimination legislation, an employer will be able to seek to justify direct age discrimination. In order to do so an employer will have to show that it was pursuing a legitimate aim and then prove that the use of an age limit was appropriate and necessary.

The Regulations provide three limited examples of a legitimate aim (for example, not having enough time to train an employee before retirement). It is thought unlikely that increased cost by itself will amount to a legitimate aim.

Indirect discrimination in recruitment is problematic and it is important to draft the wording of advertisements in a neutral way. In graduate recruitment terms such as “recent graduates” may potentially disadvantage older candidates, whilst a requirement for minimum or maximum period of experience may disadvantage older and younger candidates respectively.

Practical points:
Review your standard recruitment practice to remove any potentially discriminatory terminology. Consider a risk assessment of your current practices to see whether an apparently neutral criterion actually disadvantages a particular age group.

Ensure that you have a consistent and fully transparent recruitment procedure. Ensure that those responsible for interviewing and rejecting candidates have a non-discriminatory reason for each rejection.

If you intend to maintain an age limit or potentially discriminatory wording ensure that you have identified what your legitimate aim is. Is the practice you have adopted to achieve your aim appropriate and necessary and can you prove it?

Remember that these considerations apply equally to training opportunities and internal promotion.

Pay and benefits:
Service related pay and benefits

The Regulations take a two-stage approach to looking at service related benefits.

Employers can retain service related pay and benefits which are linked to a period of service no longer than five years.

Employers with service related pay or benefits which are linked to a longer period than five years need to have a legitimate aim for maintaining them. It is thought that rewarding loyalty will meet this requirement.

The Regulations also allow benefits to be maintained if they ‘mirror’ a statutory framework. This is intended to allow employers’ to continue to operate enhanced redundancy schemes based on length of service. Note though that the government is to change the current calculation for statutory redundancy pay, removing the age element.

Insured benefits
The draft Regulations do not exempt insured benefits (i.e. life assurance and health insurance). Currently, a failure to provide such a benefit to an older worker will be direct discrimination unless it can be justified. It is doubtful whether cost itself will justify otherwise discriminatory treatment.

Pensions
The Regulations largely (but not entirely) exclude pensions from their scope. For example, it will be lawful to operate a different scheme for new employees to that which is offered to current employees.

Practical points:
Review all service related benefits. Ensure that you have a legitimate aim for maintaining those which require more than five year’s service.

Remove any reference to age from an enhanced redundancy scheme.

Harassment
Ageist harassment is made unlawful by the Regulations. Banter and jokes which may be seen as harmless now could be used as evidence of an ageist work place and support a discrimination claim.

Practical points:
Think now about training employees and managers. It is likely that conduct which pre-dates the introduction of the Regulations could be used as evidence to support a claim.