Age Discrimination

Age Discrimination

From lst October 2006 age discrimination is prohibited under the Employment Equality (Age) Regulations 2006.The Regulations protect young and old as ageism at work can be as big a problem for employees in their late teens as those in their fifties.

What is Age Discrimination?

The Regulations make it unlawful on the grounds of age to :-

• discriminate directly against an individual i.e. treat them less favourably than others because of their age – unless such treatment can be objectively justified. An example would be requiring a job applicant to be under thirty.

 

• discriminate indirectly against an individual i.e. apply a criterion, provision or practice which is applied equally to all individuals regardless of age, but which puts people of a particular age at a particular disadvantage when compared with others unless it can be objectively justified. An example would be a requirement that job applicants have a minimum of ten years experience which would indirectly discriminate against younger applicants on the basis that it is more likely that an applicant aged thirty could fill the requirement than one aged twenty.

 

Two other forms of discriminatory behaviour are prohibited by the Regulations :-

• Victimization – where an individual is treated less favourably because of raising an age discrimination complaint or for having done anything relating to such a complaint such as giving evidence in support of another individual.

   

• Harassment on the grounds of age is also forbidden where an individual, on the grounds of age, engages in unwanted conduct which has the purpose or effect of violating another person’s dignity, or creates an intimidating, hostile, degrading, humiliating or offensive environment for another.

 

What defences are available to discrimination on the grounds of age?

Under the objective justification test, direct or indirect discrimination will be unlawful unless :-

• it pursues a legitimate aim; and

 

• it is a proportionate means of achieving that aim.

 

Any justification must be objective, and the employer must be able to show that it was necessary to achieve the legitimate aim, and that there was no less discriminatory way to achieve it.

 

What is a legitimate aim?

Examples of legitimate aims include particular training requirements of a job, protection of an employee’s health and safety, encouraging and rewarding loyalty and the need for a reasonable period of employment before retirement. Economic factors, such as business needs and efficiency can be legitimate aims, but arguing that it could be more expensive not to discriminate will not be. A high street fashion shop wishing to employ younger staff in order to compliment a brand image are unlikely to be able to objectively justify this decision as a legitimate aim.

What is a proportionate means of achieving a legitimate aim?

The extent to which something is proportionate will depend upon the importance of the legitimate aim. The discriminatory effect of any age-based practice should be significantly outweighed by the importance and benefits of its legitimate aim and there should be no reasonable alternative available to the employer. An example might be a job which requires a high level of physical fitness where an employer may be able to set a maximum age for health and safety reasons e.g. work on a construction site.

An exception also exists for genuine occupational requirements where it will be lawful to discriminate against an individual on grounds of age if the person must be of a specific age and it is proportionate for the employer to apply that requirement.

This is likely to be difficult to prove and employers must produce evidence to support any such defence.

 

Pay and benefits

It is not unlawful to provide pay and benefits based upon an individual’s length of service where that service is less than five years. A pay scale allowing automatic increments for each year of service up to five years, or additional annual leave accruing during the first five years of service would be lawful even though the impact disadvantages younger people as they will not have had time to accrue the benefits. If, however, an individual has more than five years service offering pay and benefits dependent upon that length of service will amount to indirect age discrimination because some age groups are more likely to have completed the required length of service than others.

The Regulations do provide for situations in which it may be lawful to use length of service in determining pay and benefits where the aim of doing so is to reward loyalty, encourage motivation or recognise experience, and "fulfils a business need".

An employer could, therefore, reward an individual with twenty five years service by giving him/her a gold clock provided the employer reasonably considered that there would be a business benefit from rewarding staff loyalty or increasing or maintaining staff motivation.

What retirement age do the Regulations allow?

A new default national retirement age of 65 was introduced by the Regulations. Employers are entitled to set a retirement age at or, if they so choose, above this age but compulsory retirement below 65 will be discriminatory and unlawful unless it can be objectively justified. It is difficult to envisage a situation where a lower retirement age than 65 could be justified.

A "duty to consider" procedure exists whereby an employer has a duty to inform an employee of his/her right to request not to be retired and of the impending retirement date. The employer must notify the employee in writing between six and twelve months before the proposed retirement date of the intention to retire the employee on that date. Upon receipt of the notification from the employer the employee may make a written request not to be retired no less than three months and not more than six months before the intended date of retirement. An employer has a duty to consider such a request and will usually have to hold a meeting with the employee to discuss that request at which the employee has a right to be accompanied. The employer must then inform the employee of its decision as soon as is reasonably practicable and which decision can be appealed by the employee if the request is refused by the employer or if the request is allowed but for a shorter period than had been requested by the employee. If an employer fails to comply with the duty to notify the employee can complain to an Employment Tribunal and any dismissal that has taken place may be unfair and discriminatory.

 

How do the Regulations affect redundancy pay and the statutory minimum wage?

The Statutory Redundancy Payment Scheme and the National Minimum Wage both operate with differential payments based upon age. Employers who make payments in accordance with the statutory minimum levels will not be discriminating on the grounds of age.

Problems can exist with enhanced redundancy payment schemes and payment of wages above the minimum wage must not discriminate on grounds of age.

Age Discrimination and the Rescession

During recession both young and old workers can suffer. Older workers, in particular, may never recover and may find it difficult to get back into employment.

The mass of redundancies resulting from the current recession is the first occasion since the introduction of the Regulations that Tribunals have had to review to any great extent how they are being applied. A variety of issues have been, and are currently being, considered by Tribunals including :-

• whether the use of length of service as a redundancy selection criterion remains lawful in view of the introduction of the regulations;

 

• whether enhanced contractual redundancy payments varying according to the age or length of service of the employee are lawful and, if so, in what circumstances;

 

• whether compulsory retirement at age 65 is contrary to the EU framework directive on equal treatment in employment;

 

For details of decisions, to date, in age discrimination claims please see the Cases section.

Advice for employers on avoiding age discrimination claims:-

• review employment policies and procedures to ensure compliance with the Regulations;

 

• where age bias procedures in policies exist consider whether they should be removed, whether they can be objectively justified and/or whether they fall within one of the exceptions allowed in the Regulations;

 

• consider the current retirement age for the organization – if under 65 can it be objectively justified? - highly unlikely.

 

• review recruitment procedures – consider the skills and qualifications actually required for the position rather than how long an individual may have been carrying out that role. Adverts targeting particular age groups or containing age limits or referring to, for example, "young and energetic" applicants should be avoided.

 

• ensure staff are adequately trained in relation to age discrimination;

 

• review pay and benefit policies to ensure no ageist features exist which cannot be justified;

 

• put into effect a "duty to consider" policy to deal with retirement at age 65 or above.

 

CASE LAW ON AGE DISCRIMINATION

Enhanced Redundancy Schemes and Justification

Galt v National Starch & Chemical Ltd – ET 2007

National Starch operated an enhanced redundancy scheme for employees. Those aged under forty received three weeks pay for each year of service and four weeks pay for each year they were aged over forty. Mr Galt, who was aged under forty, argued that he had been treated less favourably than older employees who had been made redundant. National Starch submitted that it offered enhanced redundancy pay to avoid employees taking industrial action and to allow the closure of their site in an orderly fashion. They also argued that older employees would find it more difficult to find new work and ought to be favoured financially. The Tribunal held that National Starch had not justified its less favourable treatment of those under forty and had produced no evidence to demonstrate that the enhanced redundancy scheme had achieved the stated aim of preventing industrial action nor had any evidence been produced to support the assertion that it was more difficult for older workers to obtain employment.

The Tribunal acknowledged that an orderly closure of the site and the avoidance of industrial action could be legitimate aims but that National Starch had failed to link this aim with the discriminatory scheme they operated.

Loxley v BAE Land Systems Ltd – EAT 2008

An enhanced redundancy scheme operated by BAE provided tapered benefits for those aged between 57 and 60 and excluded employees aged over 60 altogether. The reason given by BAE for excluding those over the age of 60 was that they were, at that age, entitled to take their company pension and that the redundancy scheme

avoided those aged 60 or over from receiving a windfall by being eligible for both their pension and the contractual redundancy payment. Mr Loxley was aged 61 and argued that the scheme directly discriminated against him on the grounds of age by allowing him no entitlement under the enhanced redundancy scheme. BAE accepted that the scheme treated older employees less favourably but argued that it supported a legitimate aim and was justified. An Employment Tribunal accepted that the principle of tapering redundancy payments, in order to prevent older employees from obtaining a windfall from redundancy in circumstances where they were about to retire and receive benefits under a pension scheme, was a legitimate aim and dismissed the claim. On appeal by Mr Loxley to the EAT it was held that the Tribunal had not adequately considered the matter but the following guidance points were given :-

• preventing a windfall for employees nearing retirement could be a legitimate aim of a redundancy scheme as one of the purposes of such a scheme was to cushion workers from the effect of losing their income and this would not be needed to the same extent where a pension was about to be paid.

 

• the fact that an employee was entitled to receive immediate pension benefits would be a highly relevant factor which an employer could properly take into account when determining what redundancy benefits the employee should receive.

 

• where a scheme of this kind has been agreed with a trade union it is a potentially relevant consideration when determining whether treatment is proportionate.

MacCulloch v ICI Plc – EAT 2008

ICI operated a contractual redundancy scheme providing for payments to be calculated on the basis of age and length of service. Mrs MacCulloch was aged 36 when made redundant with seven years service. Under the scheme operated by ICI she was entitled to about 55% of her annual salary. By contrast, an employee aged between 50 and 57 with ten or more years service would have received 175% of their salary. Mrs MacCulloch alleged both direct and indirect age discrimination. She alleged that she would have received a larger redundancy payment if she had been older (direct discrimination) or if she had a longer period of service (indirect discrimination).

It was conceded that the scheme directly discriminated against Mrs MacCulloch on the grounds of age – she would have received more if she had been older. The Tribunal had to consider, therefore, whether ICI could rely on the justification defence by showing that the scheme was "a proportionate means of achieving a legitimate aim". They considered that it was by rewarding loyalty, encouraging staff turnover and providing additional financial help to older workers. No detailed explanation of this decision was provided by the Tribunal and Mrs MacCulloch appealed.

On appeal, the EAT criticised the Tribunal decision and referred the matter back for reconsideration and clarification but commented that :-

• encouraging turnover and creating opportunities for junior staff are, in principle, capable of constituting legitimate aims;

 

• encouraging and rewarding loyalty was capable of being a legitimate aim;

 

• paying a larger redundancy payment to older workers as they are more vulnerable in the job market than younger workers when finding alternative employment could likewise be a legitimate aim.

 

• an Employment Tribunal is entitled to draw on its own experience in making such decisions rather than looking to an employer for evidence of the obstacles faced by older workers.

 

Consideration of the Cases to date, therefore, suggests that the following factors might constitute legitimate aims:-

• preventing a windfall for employees nearing retirement

 

• encouraging and rewarding loyalty

 

• creating opportunities for junior staff

 

• avoiding industrial action by allowing orderly closure of a site

Age related employment benefits and Justification

Swann v GHI Insurance Services UK Ltd

The employer introduced a flexible benefits scheme for employees under which all non-management staff were given a "flex fund" representing 5% of their basic salary and which could be used to buy a range of benefits from a package of options – including private medical insurance. Mrs Swann, who was aged 51, alleged that she had been treated less favourably due to her age because the private medical scheme provided for her to pay higher premiums than younger colleagues. The Tribunal held that the scheme was not discriminatory as she had been provided with the same "flex fund" as other employees even though she could buy less insurance cover than a younger colleague because those premiums were based on age. The Tribunal also considered that the scheme could be objectively justified as a proportionate means of recruiting and retaining staff. Before setting up the scheme GHI had taken professional advice and had asked employees what flexible benefits they considered the most attractive and private medical insurance had been the most favoured choice. The Tribunal considered (two to one) that these steps showed the treatment was justified. The dissenting member of the Tribunal was of the view, however, that insufficient evidence had been produced to show that the scheme aided recruitment and retention of staff and that other private medical insurance providers may have been found who did not discriminate on grounds of age.

Bloxham v Freshfields Bruckhaus Deringer - ET 2007

A firm of Solicitors overhauled its pension arrangements for partners in an effort to address a conflict between working and retired partners. Pensions for retired partners were paid out of the firm’s annual profits from which working partners also received their share. Effectively, therefore, working partners paid for the pensions of those who had retired but would, in due course, have their pensions paid by the next generation of partners. As the firm grew in size the ratio of pensioners under the scheme increased which meant that younger working partners were paying out a far greater percentage of profits to fund the pensions of those who had retired. The working partners also faced the prospect of receiving a smaller pension when they retired as the scheme was subject to a 10% cap on pension payments. The firm therefore made a decision to reform the scheme and after discussions an alternative pension scheme was put into effect which had the support of more than three quarters of the partners. In order to minimize the effect of the reforms on those nearer to retirement a transitional period was allowed in which working partners aged over 50 could choose to retire on the terms of the old scheme before the new one came into effect. Under the old scheme only those partners over the age of 55 qualified for a full pension with those retiring between the ages of 50 and 54 having a percentage reduction applied to the level of pension payable.

Mr Bloxham, who was aged 54 at the time the new scheme came into effect, had the option of either retiring prior to the introduction of the new scheme and taking benefits under the old scheme with a 20% reduction in his pension or staying on until the age of 55 and taking a pension under the new scheme which was even less attractive. Mr Bloxham claimed age discrimination arguing that he was disadvantaged by the transitional arrangements.

The Tribunal held that Mr Bloxham had suffered direct age discrimination by being less favourably treated on the grounds of age by virtue of the transitional arrangement. It went on to hold, however, that the treatment was justified because :-

• the overhaul of the pension scheme had been necessary for the firm as a whole and finding a fair and equitable solution had been difficult;

 

• one of the principle reasons for the overhaul had been the unfairness of the existing arrangements to younger partners;

 

• expert advice had been taken before any decisions had been made and many months of consideration had been given to the matter;

 

• Mr Bloxham had participated in the consultation process;

 

• a large majority of the partners had consented to the overhaul of the pension scheme;

 

• payments under the pension scheme were subject to a finite sum (the firm’s annual profits) which meant that increasing the rights of the younger partners by implication reduced the rights of the older partners. No less discriminatory way of achieving the aims of the overhaul could have been achieved.

Other Cases on Justification

Rolls-Royce Plc v Unite, High Court 2008

Following the introduction of the age discrimination regulations it had been thought that length of service should no longer be used as a redundancy selection criteria without risk of it constituting age discrimination. The issue was considered by the High Court when reviewing the Rolls-Royce redundancy procedures that had been agreed with the union Unite. Five redundancy selection criteria were to be used :-

• achievement of objectives

 

• self-motivation

 

• expertise/knowledge

 

• versatility/application of knowledge, and

 

• wider personal contribution to the team

 

Additionally, each employee was to receive one point per year of continuous service with points then deducted for unauthorised work absences. Those individuals with the lowest number of points would be selected for redundancy.

The court were asked to consider whether using length of service when selecting employees for redundancy was unlawful indirect age discrimination not capable of justification.

The court held that using length of service as one of the criteria in a redundancy selection exercise was indirect discrimination against younger workers but could be objectively justified on the grounds that it pursued a legitimate aim of achieving a fair and peaceful selection procedure. The court commented that using "last in/first out" alone may have been objectionable but using it as one of a number of factors was not and that length of service "respects the loyalty and experience of the older workforce and protects older employees from being put onto the labour market at a time when they are particularly likely to find alternative employment hard to find".

The decision has been criticized and is currently being appealed to the Court of Appeal.

 

Seldon v Clarkson, Wright & Jakes – EAT/2008

A Partnership Agreement contained a provision requiring partners to retire at age 65 (although they could be kept on longer by agreement). The Regulations prescribe compulsory retirement at age 65 for employees but such a requirement is only lawful for the self employed (including partners) if it can be objectively justified.

Mr Seldon alleged that his compulsory retirement was an act of direct age discrimination. The Employment Tribunal hearing his case decided that a compulsory retirement age of 65 for partners of a law firm was a proportionate means of achieving a legitimate aim and therefore could be objectively justified in part on the assumption that performance tails off at around that age. His firm had put forward the following as legitimate aims for the policy :-

• allowing Associates of the firm an opportunity of partnership after a reasonable period;

 

• facilitating partnership and staff planning with realistic expectations as to future vacancies;

 

• contributing to a congenial and supportive work place culture by limiting expulsion of partners through performance management.

 

Mr Seldon appealed to the EAT who considered that the Tribunal were wrong in finding that direct discrimination had been justified. The EAT felt this was not supported by the evidence and involved stereotyping. The test with regard to direct age discrimination was stated to be the same as that which applies to the other forms of discrimination. It was not correct to consider that direct age discrimination should be allowed only in exceptional cases. A submission was also rejected by the EAT that there could be no justification at all where the firm had not even considered the impact of the age discrimination legislation at all nor addressed any justification for the policy adopted.

The EAT felt that if the partners were able to show that careful thought had been given to a retirement age and could rationally explain the chosen retirement age a Tribunal when deciding such a case should give considerable weight to such a factor.

Hampton v Lord Chancellor 2008 – ET 2008

Mr Hampton sat as a Recorder (a fee paid judicial office) for which the retirement age was set at 65. When Mr Hampton reached that age in March 2007 he had to retire. Most other judicial offices had retirement ages of 70. Mr Hampton claimed that the retirement age of 65 for the office of recorder was discriminatory on the grounds of age.

The Lord Chancellor argued that setting a retirement age of 65 was a proportionate means of achieving a legitimate aim because :-

• imposing a retirement age of 65 for Recorders was necessary in order to maintain a reasonable flow of new appointments;

 

• the policy struck a reasonable balance between recognizing the value and experience of the individual and bringing in new blood to the fee paid judiciary;

 

• the stated aims ensured the quality of full time judiciary, were legitimate and whose importance outweighed any discriminatory effect which could not be achieved by any less discriminatory alternative means;

 

• the Tribunal held that the Lord Chancellor had failed to produced evidence that allowing recorders to continue to work until aged 70 would affect the ability to produce sufficient suitable candidates for the judiciary. The Tribunal also considered that other possible steps could have been taken to ensure younger recorders were given the experience required by, for example, reviewing allocation of cases or removing recorders who worked less than the minimum time commitment required for judicial appointments. They had also not shown evidence to support some of the assumptions made such as that all recorders aged over 65 would remain in post until age 70.

Dismissal and Age Discrimination

Wilkinson v Springwell Engineering Ltd – ET 2008

Miss Wilkinson, who was aged 18, was employed by Springwell as an Office Administrator having taken over the role of a more experienced individual. One month into her three month probationary period Springwell advised her that her work must improve as she was only carrying out 90% of her allocated tasks. They also asked an administrator from another office (who was older than Miss Wilkinson) to carry out some of her work. After two months she was dismissed on the grounds that she was "too young" for the job. There was no attempt by Springwell to follow the statutory disciplinary and dismissal procedures nor did they respond to an age discrimination questionnaire that was subsequently served upon them. The fact that Springwell had asked another older administrator to do some of Miss Wilkinson’s work led the Tribunal to conclude that Springwell had made a stereotypical assumption that there was a relationship between experience and age and capability to the detriment of Miss Wilkinson. Her claim for age discrimination therefore succeeded and Springwell had failed to establish that age was not the reason for dismissal nor provide evidence that the less favourable treatment of her was objectively justified.

Thomas v Eight Members Club – 2007

A 19 year old was dismissed after three months employment purportedly on grounds that she was "too young" to perform her job. Her claim for age discrimination succeeded by default and she was awarded £1,500.00 compensation for injury to feelings.

Martin v SS Photay Associates – ET 2007

A 70 year old cleaner was dismissed on the basis that she fell into a "high risk category for health and safety" because of her age. The Tribunal considered the dismissal to amount to unlawful age discrimination. They held that the employer had failed to provide evidence to substantiate its claims that she was "high risk", that there had been no consultation with the employee and that the decision to dismiss had therefore been based on assumptions and not evidence. The Tribunal did acknowledge that it may have been a legitimate aim for the employer to ensure that its premises were adequately cleaned but it was disproportionate to dismiss the Claimant without having first consulted with her.

Court v Dennis Publishing Ltd – ET 2007

As a result of an internal re-organization Mr Court was dismissed on grounds of redundancy when aged 55. He was more than twenty years older than the rest of the team from which he had been selected for redundancy and the individual brought in to head the new team was also much younger. The owner of the business in which he worked had written a book in which he passed comment that older "talent" was "very, very expensive" and that senior employees should not be left "in any job too long". A Manager had also made notes referring to the need to correct the assumption that age had been the only factor in Mr Courts dismissal. Upon considering Mr Court’s claims for direct and indirect age discrimination the Tribunal concluded that age had been a factor. The Tribunal held that the employer had not been able to show that the difference in treatment had been for non-age related reasons.

Wording in Advertisements

McCoy v McGregor and Sons Ltd - 2007

The employer timber merchant advertised for a sales representative with "youthful enthusiasm". Mr McCoy who was aged 58 applied for the post and was asked whether he still had the necessary "drive and enthusiasm" to be successful both when he enquired about the post and at two subsequent interviews. Two less experienced applicants, both fifteen years younger than Mr McCoy, were appointed. Neither had been asked about their drive and enthusiasm. The Tribunal concluded that Mr McCoy had been directly discriminated against and confirmed that they were satisfied that in the mind of the employer there was a clear link between his age and the motivation he would bring to his work.

Rainbow v Milton Keynes Council - 2008

Mrs Rainbow was a qualified teacher with over thirty years experience. She worked for a school in Milton Keynes and was on one of the highest pay scales for teachers. When the school got into financial difficulties an agreement was reached with Mrs Rainbow that she would accept a reduction in her working hours in return for being given the opportunity to work all supply cover days and being informed of any future positions suitable for her that might arise within the school. The school, however, provided supply work to external agencies informing Mrs Rainbow that she was too expensive. Shortly afterwards a full time post became available at the school and an advertisement was placed saying that the post "would suit candidates in the first five years of their career". Mrs Rainbow applied but was not even sent an application pack. The individual who was appointed to the post had four years teaching experience and a salary of around £7,000.00 per year less than Mrs Rainbow. Mrs Rainbow brought claims for both direct and indirect discrimination. The Tribunal held that the employer had rejected Mrs Rainbow not because of her age but on the basis of costs and that there was no direct age discrimination. When considering the question of indirect discrimination the Tribunal looked at the provision, criterion or practice that was applied, namely the decision to appoint somebody in the first five years of their career. As Mrs Rainbow was 61 and with over thirty years teaching experience her age group was clearly disadvantaged by that decision and a teacher aged over 60 was likely to have had more than five years teaching experience.

The employer argued that the financial constraints they faced should be taken into account as a proportionate means of achieving a legitimate aim but the Tribunal decided that no detailed evidence had been put before it to justify the costs constraints that had been suggested.

The finding of the Tribunal related to the failure to shortlist for interview rather than the wording of the job advert.

Raines v Commission for Racial Equality 2007

Mr Raines applied, through a Recruitment Agency, for a position as a case-worker with the CRE. He was informed that they were seeking a person who could "hit the ground running" and who had recent casework experience. Mr Raines was not short listed for interview and was informed by the Recruitment Consultant that he was "too senior" for the post and was over qualified. He did not, however, have relevant recent experience. He claimed direct and indirect age discrimination. He said that the reference to seniority was age discriminatory. The Tribunal decided that this was a remark of one individual and not the view of the CRE as a whole and that a person in the same age bracket as Mr Raines had been shortlisted. His indirect age discrimination claim was that the CRE requirement for someone who could "hit the ground running" put older applicants at a disadvantage. The Tribunal disagreed and said that such an observation did not put any particular age group at a disadvantage. The Tribunal went on to comment, however, that had they found that such a requirement was discriminatory they would not have accepted it could be justified.

The Tribunal were also critical of arguments advanced by the CRE that they wished to avoid employing somebody whose skills would be under utilized and who might, therefore, be more likely to leave and these were considered unfounded assumptions not supported by evidence.

 

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