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PREVIOUS SPEAKERS:

Malcolm Sargeant

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Title: "Never too old to work Age Discrimination in Employment"

Contents

1. Background 2. The Equal Treatment Directive 3. Government consultation 4. Age rules in UK legislation 5. Retirement

1. Background

1.1 Introduction

Prior to the 1997 general election the Labour Party was committed to legislation on age discrimination. In 1995, Ian McCartney MP stated

The next Labour Government will introduce legislation to make age discrimination illegal, just as discrimination on the grounds of race and sex are today.

After the general election, they changed their minds and decided that a non-statutory route was the correct one. After a consultation, the Government issued a Code of Practice on Age Diversity in Employment in 1999, rather than one on age discrimination. This approach was a failure and one report on the impact of the Code (see Evaluation of the Code of Practice DWP 2001) stated that

Very few people who took part in the research (either employers, employees or others) could offer knowledgeable or spontaneous comments on the Government’s position.

Only 9% of employers and less than 1% of employees had seen the Code.

Now there is an Age Discrimination Unit in the DTI and, in July 2003, an Age Discrimination Consultation was launched. The plan is to have Regulations adopted by the end of 2004, to come into effect on October 1 2006.

1.2 Reasons for age discrimination legislation

The debate about age discrimination have become confused with debates about other issues, such as the closing of defined benefits pension schemes and the demographic change that is taking place within the EU. The discussion is not only about whether discriminating on the grounds of chronological age is right or wrong, it also about whether the present arrangements can cope with an ageing population. This is perhaps unfortunate because there is a debate to be had about age discrimination in the abstract and whether such discrimination is really the same as that based upon, for example, disability, race or sex.

Nevertheless those of us who are in favour of age discrimination legislation need to take comfort from the demographic and economic imperatives that are driving the arguments for legislation.

There are some 18.9 million people aged 50 or over in the United Kingdom, making up about 40% of the total population. Some 5.7 million of these are still in employment and aged between 50 years and the state pension age. The employment rate for men aged between 50 and 64 years is 68.7% and for women between the ages of 50 and 59 years is 63.5%. This compares to an employment rate for all people of working age of 74.6% (see House of Commons Select Committee on Education and Employment report on Age Discrimination in Employment Seventh Report Session 2000-01). The number of economically inactive men in the 50-64 age group had increased from 490,000 in 1977 to 1,321,000 in 2000.

Over the 25 year period between 1996 and 2021 the proportion of people, in the United Kingdom, over the age of 44 years will increase from 38% to 46%; the 45 to 59 age group will increase by almost one quarter; the 60 to 74 age group will increase by over one third and the 75 years and over group will increase by 28%. In contrast the 16 to 29 years age group will fall by 5.7%.This process is a Europe wide one, although the speed of the process is variable as between Member States.

A demographic argument for change suggests two outcomes:

- that the argument is really about raising the retirement age in order to stop people becoming an economic burden on a reducing workforce

- that there will be a need to retain older workers in the workforce, because there will be a reduction of the number of young people entering it.

This latter point is one of the business benefits that the Government claims will come from a more age diverse workforce.

1.3 What is age discrimination

Everyone has some age (see Lawrence M Friedman, Your time will come: the law of age discrimination and mandatory retirement Russel Sage Foundation New York 1984), so

presumably every one is capable of suffering from age discrimination.

The Government's 1998 consultation document stated, at para 2.10, that

It is hard to define age discrimination succinctly. The consultation made it clear that there can be both direct and indirect forms of age discrimination in employment. The most obvious forms are where people held strong, stereotypical views about a person's capabilities to do a job or to be developed because of their age.

Some conclusions of a DFEE report on older workers were that, firstly, older workers were less likely to be in paid work than younger groups and when they did work they were more likely to be working as self-employed or part-time. Secondly, that there was a greater risk of becoming economically inactive beyond the ages of 50 and 55 years; and, thirdly, taking all forms of inactivity together, the chances of men leaving inactivity for paid work were sharply reduced after the age of 50 years and ‘were close to zero for those over 60’. For women the chances of moving out of inactivity were much reduced after the age of 40 years and ‘was particularly uncommon for those in their late 50s’. (Characteristics of Older Workers DFEE Research Report RR45 1998).

The 2003 DTI consultation provides generalised definitions, but, interestingly, suggests that direct discrimination can occur when a decision is made on the basis of a person’s actual or perceived age. Examples of age discrimination given in the Government consultation document are:

• Being forced to retire after reaching a certain age
• Not being given a job they applied for because of their age
• Being told their age was a barrier to general advancement
• Assumptions being made about abilities due to age
• Being selected for redundancy because of age

Age discrimination can take place against young workers as well as older ones. One research project (Ageism: Attitudes and experiences of young people:   www.agepositive.gov.uk) showed evidence of ageism against younger people in the workplace. Age related behaviour affecting the young included

• age limits on job applications
• ;talking down to younger people in a patronising fashion and tone of voice
• not appointing or promoting younger people because of their age
• refusing access to training on grounds of age
• making junior staff do all the menial tasks
• paying younger staff less
• excluding younger staff from pension arrangements
• restricting redundancy payments to years of employment after 18 years of age

1.4 Is age discrimination different to other forms of discrimination?

The approach does appear to be different. There might be more opportunities to ‘differentiate’ rather than ‘discriminate’ between persons of different ages (see below).

The US Secretary of Labor commenting in 1965 on the existence of age discrimination stated:

We find no significant evidence of the kind of dislike or intolerance that sometimes exists in the case of race, color, religion, or national origin, and which is based on considerations entirely unrelated to ability to perform a job.

He did go on to say, however, that

We do find substantial evidence of discrimination based on unsupported general assumptions about the effect of age on ability in hiring practices that take the form of specific age limits applied to older workers as a group.

(see Professor Howard E Eglit: The ADEA at Thirty 31 U.Rich.L.Rev. 579)

2. Directive 2000/78/EC establishing a general framework for equal treatment in employment and occupation

(OJ L303/16 December 2 2000)

The Directive, of course, covers a number of other areas besides age. The justification for the Directive, contained in the Preamble, does not refer to any demographic need, but is in terms of fundamental rights and freedoms. The Preamble refers to the principle of equal treatment and the rights of persons to equality before the law and protection against discrimination, as recognised by various UN and ILO declarations.

The approach is the same as other measures in relation to disability, sexual orientation, religion or belief. The Directive aims to introduce the ‘principle of equal treatment’ into all these areas. This means that there shall be no direct or indirect discrimination (Article 2.2). Harassment is also to be unlawful.

Article 4 provides for the possibility that a difference of treatment may be justified where there is ‘a genuine and determining occupational requirement, provided that the objective is legitimate and the requirement is proportionate’.

Article 6 is headed ‘Justification of differences of treatment on grounds of age’. Differences in treatment on the basis of age may be justified if ‘they are objectively and reasonably justified by a legitimate aim including legitimate employment policy, labour market and vocational treatment’. Examples given of such differences are

- the setting of special conditions for access to employment and training, including dismissal and remuneration for young people, older workers and persons with caring responsibilities in order to promote their integration into the workforce;

- the fixing of minimum conditions of age, professional experience or seniority for access to employment or certain advantages linked to employment;

- the fixing of a maximum age for recruitment which is based either on the training needs of a post, or the need for a reasonable period before retirement.

It is interesting that it was felt necessary to spell out these exceptions to age discrimination in the Directive. It is perhaps symptomatic of the way that age discrimination is treated differently from other forms of discrimination. These provisions effectively state that some age discrimination is benign. There appears to be an economic or business argument that suggests that more harm will be done if discrimination does not take place, rather than an argument that states that age discrimination is wrong and can only be justified in exceptional circumstances. Effectively widespread discrimination is not to be allowed to continue except those forms which are held to be for the economic good of business.

Bob Hepple QC criticises the Directive generally on a number of grounds and these should be noted (see Bob Hepple Age Discrimination in Employment: Implementing the Framework Directive; a paper presented to the IPPR seminar, 11 December 2001).

The criticisms are:

- the Directive is limited to a miscellaneous set of grounds of unfair discrimination; the Council has missed the opportunity to adopt a single unified Directive

- it is limited to employment and occupation

- it is based only on negative prohibitions against direct and indirect discrimination, rather than a positive duty to promote equality.

Most of all, however, it is a qualified Directive. It will, as is shown by the consultation document, result in a qualified set of UK Regulations, which makes age discrimination unlawful except in respect of important areas of HR policy.

3. Government consultation

3.1 Who is covered

- people who are working

- applicants for work

- office holders

- those taking or applying for employment training

- those applying for or undertaking FE and HE courses

- in some circumstances those who have left work, work related training, or FE and HE institutions

- members, or applicants for membership, of trade unions or trade or professional bodies

3.2 What is covered

Direct Discrimination takes place when a decision is made on the basis of a person’s chronological or perceived age; unless it can be justified

Indirect Discrimination

This is said to arise when

- employers or others with obligations apply an apparently neutral provision equally to employees or prospective employees or others protected by the Directive

- it puts people of a particular age at a disadvantage

- an individual can show that he/she has suffered a disadvantage

The Government plans to use the same approach as in new regulations on sexual orientation, religion or belief.

Harassment

A complainant will need to show that

- their dignity has been violated, or

- they have been subject to an intimidating, hostile, degrading, humiliating or offensive environment.

Victimisation

Protection for complainants

3.3 Justifying differences in treatment

Respondents to the 2002 DTI consultation document Towards Equality and Diversity had suggested a variety of age practices that could be justified in certain circumstances:

If a job required a minimum age such as driving or bar work 30%

If the return on training was not cost beneficial 30%

If the work was of a very physical nature 21%

Minimum or maximum age on grounds of health and safety 18%

If a job needed life experience, e.g. a social worker 18%

If peers of a similar age were needed, e.g. a holiday

rep on an 18-30 holiday 11%

Recruitment - 41% of respondents thought age based recruitment schemes were justifiable, 59% thought not

Promotion - 65% of respondents thought employers should not be able to deny promotion on age grounds; 35% thought there were times when an employer should be able to do so.

Training 68% of respondents thought it OK to deny training in certain circumstances, e.g. cost of training compared to amount of career left

Article 6 of the Directive (see above) is interpreted as allowing Member States to justify direct discrimination where it can be objectively justified by reference to specific aims and are appropriate and necessary.

The sort of specific aims which might justify differences in treatment are given in the consultation document as:

- health, welfare and safety; e.g. the protection of young workers

- facilitation of employment planning; e.g. where a business has a number of people approaching retirement age at the same time

- the particular training requirements of the post in question; e.g. air traffic controllers, who have to undertake 18 months theoretical and practical training at the College of Air Traffic Control, followed by further on the job training

- encouraging and rewarding loyalty

- the need for a reasonable period of employment before retirement

The Government proposes that there will be an opportunity for employers to justify specific practices in relation to the retirement age, pay and non-pay benefits, recruitment, selection and promotion

4. Age rules in UK legislation

4.1 There are permitted specific exemptions for state benefits or similar schemes.

4.2 National minimum wage - lower rates for young workers can be justified.

4.3 Working time - different rules for young workers

4.4 Unfair dismissal

- s109 ERA 1996 currently provides for an upper age limit for those entitled to the right not to be unfairly dismissed

The proposals provide that a dismissal for retirement will be fair if the individual has reached, or exceeded, normal retirement age, or the default retirement age of 70 years. If no retirement age justified and/or no default retirement age, then dismissal for retirement would be automatically unfair.

Unfair dismissal claim for any other reason to be allowed regardless of age, whilst working.

4.5 Statutory redundancy payments

- s156 ERA 1996 currently provides for an upper age limit for those entitled to a redundancy payment.

The proposals provide that service before age of 18 years should be included and that the entitlement should continue as long as the individual continues to work.

4.6 Basic award for unfair dismissal and redundancy payments are not to be age related:

- remove tapering in last year before retirement

- 20 year limit to be kept

- one week per year of service

5. Retirement

5.1 Introduction

There is no national mandatory retirement age, but over half of men have a fixed retirement age in their contract of employment; 75% of these have the State Pension Age as their retirement age.

Traditional reasons for having a fixed retirement age are

- occupational pensions have a normal retirement date

- correlation between state pension age and normal retirement date

- older workers make way for young ones

- younger workers have a higher level of productivity

(see Pamela Meadows: Retirement ages in the UK: a review of the literature DTI Employment Relations Research Series No 18)

5.2 When do people retire?

Proportion in paid employment by age:

Only 37% of men are still working at the age of 64 years.

Two-thirds of men who work after 65 years retire within two years.

Not directly comparable figures, but interesting to see figures for the USA:

Proportion of economically active men by age (USA 1996):

A good domestic example of retirement practices can be seen in the statistics for school teachers’ retirement:

School teacher retirements

In the period 1998/99 to 2001/02, approximately 49% of teachers retired at their contractual retirement age. All the rest retired early, including about 23% of the total who retired for health reasons.

The more general evidence is that these figures are not unusual, both in the private as well as the public sector. Research suggests that about one third of all those who begin to draw their pensions are aged 54 years or less and about two thirds are aged 59 years or under (Early retirement schemes still the norm in final salary schemes IDS Pensions Bulletin 160 November 2002 p4).

A DTI survey showed that only 43% of the male respondents and 40% of the female ones expected to retire at the state pension age, although one in three would like to retire earlier. According to the Government Green Paper on Working and Saving for Retirement the mean age for men retiring in the United Kingdom is 62.6 years and for women 61.1 years. Amongst those already retired and who had retired early, the survey found that 33% had retired because of illness or disability, 16% were made redundant and 17% had their workplace closed or changed. Perhaps not surprisingly, given these figures, some three-quarters of all firms have no employees over the age of 60 years (Patrick Grattan (2002) Short guide to pensions, retirement and work Third Age Employment Network October)

5.3 Never too old(?)

A survey of 500 companies asked those companies to consider their most common job and estimate at what age, on average, they would consider someone too old to employ (Phillip Taylor and Alan Walker (1994) The ageing workforce: employers' attitudes towards older people Work, Employment and Society 8.4 pp569).

Age at which someone was too old to employ

The effect of excluding an individual through retirement, redundancy or some other form of dismissal from work is to make it very difficult for them to re-enter the workforce at all.

An example of employees’ acceptance of age discrimination is cited in the DTI evaluation of the effectiveness of its Code of Practice. In relation to training opportunities, the report states

where training for new jobs was concentrated on younger employees, some older people believed this to be acceptable to ensure that they did not impede career progress of younger staff, especially if they believed they were close to retirement or beyond training.

The problem with discussing retirement and age discrimination is that it can be welcomed by those retiring. Certainly, the lack of pressure from members reported by trade unions and the sometimes apparent enthusiasm for retirement amongst career workers in occupational pension schemes might make it difficult to look at this as discrimination in the same way as abuse based upon racial or sexual grounds.

5.4 The Consultation proposals

The State Pension Age is to remain as at present, to be equalised at 65 years. Occupational pension schemes will continue to operate on a normal retirement age basis. This is important because it is these factors which will limit the effect of abolishing or changing the mandatory contractual retirement age.

The two options offered, apart from when there was justification for a retirement age related to a job, are either making mandatory retirement an act of age discrimination or having a ‘default’ retirement age of 70 years.

The ‘default’ proposal does raise some questions, e.g.

- is it just a cosmetic way of raising the retirement age from 65 to 70 years?

- how is 70 to be justified; why not 69 or 71?

Stereotypes

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