What's the answer: Indirect age discrimination

October 13, 2006

What’s the answer: Indirect age discrimination

Are employers that make salary and job decisions based upon length of service guilty of age discrimination? Martin Brewer, partner and employment law specialist at Mills & Reeve, and Esther Smith, partner at law firm Thomas Eggar, explain.

The question:

(1) The organisation I work for frequently uses the prefix ‘senior’ or ‘junior’ in job titles.

(2) Employees are paid according to a scale point within a grade and progression from one scale point to the next is based on an annual increment rather than related to performance.

(3) Annual leave entitlements increase after 5 years service and again after 10 years service.

Could an employee have grounds for an Indirect Age Discrimination claim based on any of the above?

Stephen Davies

The answers:

Esther Smith, partner, Thomas Eggar
The legislation preventing less favourable treatment on the grounds of age only came into force in the UK on 1 October 2006, so at this time it is somewhat difficult to give detailed or definitive guidance on how the provisions will operate in practice, as there has not yet been any case law. However, in response to your three specific questions Stephen, I would comment as follows:

1. The use of ‘junior’ and ‘senior’ in job titles could give rise to claims of discrimination on the grounds of age. Although, in reality, this would be unlikely if the employer could demonstrate that the job title related to the experience or abilities of that post, or the level of managerial responsibility, rather than being linked to an employee’s age or length of service.

In addition, employers should be cautious when advertising for roles with titles such as this and take extra steps to ensure that the job title does not mislead potential candidates into thinking that the job title reflects the age of the person they are looking for. Detailed job descriptions should assist in identifying the nature and breadth of skills that the employer is looking to find in a candidate, rather than how long they have been performing these skills, or indeed how old they are.

2. Such a pay scale structure that rewards length of service by incremental payments rather than by performance would almost certainly amount to an indirect form of discrimination on the grounds of age. Some terms and conditions that are linked to length of service are covered by special provisions in the legislation (generally where by the time period specified is five years or less) but it does not appear that the pay scale in question is limited to such a period.

Even without the age discrimination legislation, such a time related pay structure is not good commercial practice and can act as a huge disincentive to high performing employees who have not been with the organisation long, as they see their peers getting paid more for putting in less effort. I would strongly advise the employer in this situation to reconsider their pay structure and look at implementing a scheme that rewards performance or skills rather than ‘time served’.

3. As mentioned above, there is an exemption within the legislation which applies to any terms and conditions or benefits that are increased or awarded on the base of length of service, where the length is five years or less.
Therefore the provision entitling holiday to be increased at five years’ service is ok. However, the provision entitling holiday to be increased after ten years’ service is discriminatory and will only be lawful if the employer can justify it. For example, by demonstrating that the increased holiday entitlement rewards loyalty and assists employee retention, which in practice will be very hard to show!

Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information please visit Thomas Eggar

Esther can be contacted at: clairec@midnight.co.uk

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Martin Brewer, partner and employment law specialist, Mills & Reeve

Stephen, let me deal with each of these in turn:

1. I don’t think that merely using the prefix ‘junior’ or ‘senior’ of themselves amounts to discrimination. However, if in fact these terms hide an age barrier in practice then clearly there is scope for a claim. And that is the very reason many commentators suggest that in recruitment we now move away from terms such as these which, when you drill down, are not that helpful anyway. What, after all, does ‘junior’ mean? I suspect it is shorthand meaning that the job requires relatively less experience. In such cases it’s almost certainly now preferable to state in the advert what actual experience you require (unrelated to age, of course).

2 and 3. This is fine in the first five years and ok after that if objectively justifiable.

Martin can be contacted at: martin.brewer@mills-reeve.com

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