Age concern

Age discrimination laws had their first birthday on 1 October 2007. In the run-up to the introduction of the Age Regulations, law firms were predicting the dawning of a new era, and warning of possible Armageddon scenarios, with employers being swamped by claims from their workforce. One year on, have the regulations made their predicted big splash?

All quiet on the Western Front?

It is easy to think that in fact the new laws have been something of a damp squib. After all, over the past 12 months we certainly have not experienced a deluge of press reports about age discrimination litigation.

In fairness, there was the occasional news article, but usually only where it had some other special interest factor, such as when it appeared that the Royal Family had fallen foul of the law by specifying in job advertisements for Buckingham Palace that they would not recruit anyone aged 64 or over.

The regulations only provide a clear exemption if the applicant is within six months of retirement, not one year.

But scratch the surface and you discover an entirely different picture. From a standing start, around 2,000 tribunal claims were filed in the first year. This is around six times as many claims as were made in the first year that UK religious discrimination laws were introduced. The same is true in relation to the introduction of UK sexual orientation discrimination laws.

Most claims are not in the public domain because there is no requirement to make employment tribunal judgments public. However, the sheer weight of applications being made means that as time goes on, news about ageist claims will become far more common.

High-profile litigation

We’ve seen two headline cases so far. The first big value age discrimination claim is the Bloxham v Freshfields Bruckhaus Deringer (2007) litigation, where ex-partner Peter Bloxham argued that other retiring partners received more generous pension terms than him on the basis of their age.

Aside from the newsworthy nature of the case, the tribunal decision that has just come out has given a very helpful steer on some of the key concepts underpinning the age regulations, in particular the test of objective justification.

In addition, the Heyday Group is suing the UK Government, alleging that the age discrimination regulations do not properly implement the EC’s Equal Treatment Framework Directive in a number of respects.

Most notably, they argue that the Government should not have introduced a national default retirement age of 65.

The case has recently been referred to the European Court of Justice, so we can expect a delay, but the recent judgment of the Advocate General in Palacios de la Villa v Cortefiel Servicios SA (2007) suggests that Heyday may not be onto a winner on the default retirement age point.

Age gap

It is often easy to forget that the UK’s age discrimination laws are symmetrical, applying to everyone, young and old. However, anecdotal evidence suggests that a good proportion of the claimants are older workers.

There appears to be little litigation so far from younger workers, which is perhaps unsurprising given that most people tend to think first of older workers when talking about age discrimination. However, it is no doubt just a matter of time before claims are brought alleging discriminatory treatment because of youth.

Workplace issues

Somewhat surprisingly, a key focus for disputes has been at the recruitment stage. This was unexpected, because if there is any part of the employment relationship that an employer can properly structure and regulate to minimise the risk of discrimination issues, the recruitment process is it.

There are also suggestions that retirements are another hot spot for claims. Although the regulations allow employers to retire employees at age 65 (or the employer’s retirement age, if later) without risk of age discrimination or unfair dismissal liability, care still needs to be taken to avoid other types of liability. For example, if the reason for retiring someone is because of poor health, this may raise the spectre of a disability discrimination claim.

‘Fault lines’ and trends

- General ageist treatment and harassment: The regulations require employers and employees to make radical changes in mindset. Surveys over the past year have shown that ageism in the workplace is still very common. For example, recent research by the Employers Forum on Age revealed that 59 per cent of workers claim to have witnessed ageist behaviour in the workplace during the past 12 months.

We can therefore expect to see a growing number of claims for ageist treatment and behaviour that many people still believe is acceptable, but which is in fact unlawful.

- Redundancies: Historically, enhanced redundancy payments have been designed to reward those who are older and/or who have worked for the employer the longest. Although most employers recognise the age discrimination risks inherent in these arrangements, many have not had the appetite to try to change them given the potential conflict this might cause with employee representatives (and especially trade unions).

If left unaddressed, the worst-case scenario is that all enhanced redundancy payments would have to be levelled up to the maximum amount offered under the scheme - potentially a very costly issue. And given the current uncertain economic climate, this is very much a ticking time bomb.

- Insured benefits: Insurers currently price insurance products such as life insurance and medical insurance on the basis of age.

In particular, it becomes very expensive to offer these benefits to people aged 65 or over. This acts as a strong disincentive to employers to employ anyone over the age of 65, which goes contrary to the philosophy behind the regulations of encouraging staff to continue working beyond their normal retirement age, and also causes considerable problems for those employers who try to pass on the cost of these benefits to their workforce.

Batten down the hatches?

The original predictions about the impact of age discrimination law have so far been accurate. The fact that we have only heard about a couple of high-profile claims is unsurprising at this stage, given that the law is bedding down and no claims have yet been appealed.

However, combine the clear growth trend in age discrimination litigation with allegations of significant ageist behaviour in the workplace and it is ever more likely that age discrimination issues will be pushed to the top of employers’ agendas.

Naomi Feinstein is a partner and Adam Turner of counsel at Lovells