In three years time it will be unlawful for an employer to dismiss an employee just because they have reached retirement age. Indeed except in exceptional circumstances it will be unlawful to have a standard retirement age for the workforce at all. It will be unlawful to take account of a worker's age in calculating a redundancy payment or unfair dismissal basic award, and it may also be unlawful to pay more to a worker by reason of their length of service, or to cap service at, say, 20 years in the calculation of a contractual benefit. Laws outlawing discrimination on the grounds of age will be in force by October 2006. Given the significant implications of the change, many employers are changing their work practices now so as to be in a position to absorb the changes more easily when they finally become compulsory.
Age discrimination is the last and final strand of the European Framework Directive to be implemented. We already have laws against race, gender and disability discrimination. As a result of the Framework Directive, we will see Regulations outlawing discrimination on the grounds of religion and sexual orientation coming into force in December 2003. Then as from October 2006, we will have laws outlawing discrimination on the grounds of age. The government initially consulted on the broad principles of age discrimination in Towards Equality and Diversity in 2001. In Age Matters, (as if age did not matter?) published in July 2003, we see the further more detailed consultation from government, specifically on proposals for implementing age discrimination laws in the UK.
The European Directive, which the government is committed to implement, sets out the requirement for a law outlawing discrimination on the grounds of age by reference to the well-trodden paths of direct and indirect discrimination. However, unlike the other discrimination strands, direct discrimination on the grounds of age can be objectively justified by a legitimate aim. Much of Age Matters is concerned with what might constitute a valid justification defence, in particular in relation to the most problematic of issues: compulsory retirement ages. Whatever else is unclear about the impact of the Directive, what is clear is that the days of compulsory retirement ages are numbered.
Age Matters therefore sets out five "specific aims" which the government suggests might amount to valid defences to any case of direct discrimination on the grounds of age.
They are health and safety, facilitation of employment planning ("where a business has a number of people approaching retirement age at the same time"), training requirements for a post, encouraging and rewarding loyalty, and the need for a reasonable period before retirement. How it is proposed the defences will work is that in relation to any potential act of age discrimination, an employer could establish a defence if they can show that they can justifiably bring their decision within one of these potentially fair categories of defence.
Quite how these "specific aims" outlined in the consultation paper fit with the justification defence set out in the Directive is not clear. The Directive suggests that any blanket justification for age discrimination will be unlawful, and the defence will only apply if in any particular case the employer makes a decision on the facts relating to the particular employee and the particular requirement of the business.
Still less clear is how the proposed "default" retirement age of 70 will fit with the requirements of the Directive. Acknowledging the difficulties that an employer may face in not being able to implement any uniform provision on retirement ages, the Consultation Paper suggests that there should be a default retirement age of 70 beyond which age employers could compulsorily retire without having to justify their decision.
A common misconception regarding the proposed changes is that it will mean that workers will have to slog on at work until they are 70 or over before they can retire. That is not the case. Any employee will have the right to retire when they wish, and the new law will simply allow those who do wish to continue at work to carry on working without having compulsory retirement imposed on them. What is central to the debate is the issue of pensions. If a 65 compulsory retirement age goes, does that mean that pensionable age will also be increased, so neatly providing a solution to the current pension crisis? The government assures us that this will not happen, though the implications of the changes to the law on pension entitlement are not spelt out in the consultation document.
What is clearer is that if compulsory retirement ages are to go, then so will the age limits on employees being able to pursue claims for unfair dismissal and redundancy payments. What could be more discriminatory than an employer dismissing unfairly at age 66 solely because they know that the employer has no remedy through the Tribunals by reason of their age? Acknowledging that the age cut off points for unfair dismissal at normal retirement age failing which 65 will be unlawful, Age Matters suggests that instead the law should provide that where, exceptionally, an employer has managed to establish a justifiable retirement age then that may be the cut off point for an unfair dismissal claim. Failing that a cut off can be set at the age 70 default limit.
Sixteen gets sweeter
Age discrimination will protect the young as well as the old. Our current system of taking age into account in calculating basic awards and redundancy payments will also be unlawful. Currently these calculations increase according to whether the employer is aged under 21, between 21 and 40 or over 41, with the younger employee receiving only half a week's wages for each year of service, the 21 to 40 year old receiving one week's pay and the over 41 receiving one and a half week's pay. This, as Age Matters acknowledges, amounts to unlawful discrimination against the younger worker.
Unfortunately however the government seeks to address the problem by "averaging out" the calculation at 1 week's pay. Although UK employees currently receive significantly less by way of redundancy payment than our European counterparts, the consultation paper threatens to reduce the entitlement still further for those over 41.
On the basis that the 20 year cap on service counting towards a basic award would be indirectly discriminatory against older workers with more than 20 years service, Age Matters proposes that the cap be removed. Also helpful, the absence of entitlement to a redundancy payment for the under 18s would also be removed, on the basis that this is clearly (and unjustifiably) directly discriminatory against those employees who are under 18.
Age Matters covers many other issues related to age discrimination. Where the Directive requires implementation of issues similar to those in the other strands such as sexual orientation or religion, then the consultation paper suggests that the provisions are duplicated. So, for example, we see broadly the same definition of harassment and victimisation on the grounds of age as with sexual orientation and religion, and the same procedural points such as time limits for pursuing Tribunal claims.
Responses to the consultation paper had to be submitted by 20 October 2003. The government state that they will be developing draft regulations in the light of those responses with a view to consulting on them in the first half of 2004. The intention is that they will be laid before Parliament by the end of 2004 to allow 2 years for employers to familiarise themselves with the Regulations.
On reading Age Matters one is only too aware of the huge changes that employers will have to make to work practices to ensure compliance with the new laws. What must not be lost sight of is that the introduction of laws preventing unjustified discrimination on the grounds of age will remove one of the final injustices in our current industrial relations structure. By outlawing less favourable treatment for that most arbitrary of reasons - a person's date of birth - we will see our workplaces move closer to the ideal of each worker being judged according to their contribution and ability rather than the preconceived ideas of the employer.