Grey matters

first_imgRelated posts:No related photos. Comments are closed. Grey mattersOn 1 Apr 2003 in Personnel Today Employment rights for retirement-age staff, anti-ageism legislation andchanges to pensions provision are all up for grabs as employers struggle withtheir demographic destiny. Sue Nickson advises on what it means for HR policiesPeople are living and working longer than ever before, and the birth rate isin decline, a trend which is likely to continue for at least 20 years. TheOffice for National Statistics predicts 35 per cent of the workforce will beaged over 45 by 2005, rising to 40 per cent by 2010. Politicians and employers are having to address the complex consequences ofthis demographic trend, for working patterns, retirement ages and pensions. Itseems inevitable that as the population ages, it will become necessary forpeople to work longer. Recent challenges to the validity of UK legislation onunfair dismissal and redundancy rights of the over-65s, together with theEuropean-led drive towards age equality in the workplace, are adding to thedebate on what are and will be acceptable (and legal) age-related practices inthe workplace. Current legislation: unfair dismissal and redundancy Currently, employees who have reached 65, or the normal retirement age for thejob (NRA), are not eligible for statutory redundancy payments and cannotgenerally bring unfair dismissal claims (under sections 156 and 109 EmploymentRights Act 1996). The validity of these exclusions has been in question forsome time. Most recently, in Harvest Town Circle Ltd v Rutherford 2001, claimsfor unfair dismissal and a redundancy payment were brought by Rutherford, whoat 67 was on the face of it excluded from both by his age. It was argued thatthe upper age limit discriminated against men and amounted to unlawful sexdiscrimination, which could not be justified. At first instance, the tribunal agreed. But in August 2002, the Stratfordtribunal – following guidance from the EAT – considered detailed statisticalevidence and found the exclusion did have a disproportionate and unjustifiableimpact upon men. This decision dealt with the statistics at such length and in such detail,that other tribunals are unlikely to dispute the point about disproportionateimpact. It would be a brave employer that took on the burden of disproving thestatistics relied on in this case for some time to come, not least because itwould probably be more expensive to do so than just conceding unfair dismissal.The Secretary of State’s appeal is to be heard by the EAT in May. Future legislation: age discrimination At present, there is no legislation outlawing age discrimination, despiteevidence which suggests it is not a minority issue. A recent report by the Employers’ Forum on Age estimated the annual cost ofageism to the economy is £31bn. While the Government has extolled the economic and social advantages of anage-inclusive workforce, this is supported only by a non-enforceable Code ofPractice, the current version of which is Age Diversity at Work 2002. However, the Government has until December 2006 to implement its commitmentunder Article 13 of the EU Employment Directive 2000 to put in place agediscrimination legislation. In the consultation exercise on the FrameworkDirective (Equality and Diversity: The Way Ahead), which closed in January2003, the Government made certain basic proposals for age discriminationlegislation. A second round of consultation will commence this spring, followedby a final consultation on the draft regulations in spring 2004. The Governmentenvisages the regulations will be in force no earlier than December 2006. The Government proposes that like existing anti-discrimination legislation,the age regulations will outlaw direct discrimination, indirect discrimination,harassment and victimisation. The Directive applies to: – access to employment, self employment or occupation, (including selectioncriteria and recruitment conditions in all branches of activity and includingpromotion) – access to vocational guidance, training, and work experience – employment and working conditions, including dismissals and pay – membership of and involvement in a workers’ or employers’ or employmentorganisation or any professional organisation – virtually all categories of worker except, in most cases, the genuinelyself employed. It will outlaw unjustified age discrimination for all relevantworkers, young or old The Directive allows for justified differences of treatment when acharacteristic constitutes a genuine occupational qualification for the job. Italso provides that differences of treatment on grounds of age may be”objectively and reasonably justified” by a legitimate aim within thecontext of national law. There will no doubt be considerable debate on thispoint during the consultation exercise. The Directive itself gives examples of when discrimination might bejustified, to include allowing: – Special conditions in respect of certain age groups “in order topromote their vocational integration or ensure their protection” – The fixing of minimum conditions of age, professional experience orseniority in service for access to employment or certain advantages linked toemployment – The fixing of a maximum age for recruitment based on the trainingrequirement of the post in question or the need for a reasonable period ofemployment before retirement So far as compulsory retirement is concerned, the Directive will meanemployers will not be able to impose their own retirement age, unless there arecircumstances peculiar to the business which provide an objectivejustification. Future legislation: pensions and tax Increased longevity is posing complex challenges for the affordability ofpensions. While most workers hope for continued rising standards of living inretirement, as many as 3 million people are estimated to be saving inadequatelyfor that purpose. At the same time, occupational schemes are under pressurefrom rising costs, with some schemes being closed or employer contributionscut. The Government’s proposals in the face of this are contained in twoprinciple documents. The Department for Work and Pensions has published a GreenPaper entitled Simplicity, Security and Choice: Working and saving forRetirement. The Treasury and Inland Revenue have also published proposals forthe simplification of pensions taxation in Simplifying the taxation ofpensions: increasing choice and flexibility for all. Both principal documentsare consultation papers. The consultation for the Green Paper closed on 28March. The consultation on the tax proposals closes on 11 April. Although there are no proposals to increase the state pension age, the GreenPaper does propose that people should be encouraged to work past 65 bydeveloping the concept of flexible and phased retirement. It is also proposedthat from 2010, people should gain at least 10 per cent for each year that theydelay drawing their pension (compared to 7.5 per cent now). Further, peopleshould be allowed to remain in the same employment while receiving any pensionbuilt up in that job (this is prohibited under the current tax system).Tax-efficient early retirement, except in cases of ill health, will move fromage 50 to 55 from 2010. The Government hopes to introduce the tax changes vialegislation from April 2004. The combined effect of these age-related issues will be profound. Employersneed to be prepared for the changes ahead if they are to make appropriate andtimely changes to policies, procedures and practices. Those who participate inthe current consultation process on the scope and shape of impending agediscrimination and pension legislation, will be contributing enormously to theobjective of having workable and effective legislation. Sue Nickson is head of employment at Hammonds Over 65s dismissal and redundancy– Pending appeal, employees over theNRA, or if there is none 65, can bring claims for unfair dismissal orredundancy. This is regardless of whether there is a contractual retirementage. It is likely that all such claims will be stayed during the appealprocess, which could go as far as the ECJ and may therefore take many months toresolve– Do not assume that all employees will wish to retire at theNRA or 65. Communicate with those approaching retirement age to discuss theirexpectations and needs– Explore possibilities for alternative employment and/orworking patterns where necessary or desired – Do not rely on impending retirement to resolve problemsrelating to discipline, performance or sickness with older employees; followfair and appropriate procedures in all cases. Assume a genuine and fair reasonfor dismissal will be required, and that a fair procedure towards dismissalmust be followed – Do not select for redundancy by reason of ageMany believe older workers bringbenefits to business such as:– Improved staff retention rates– Higher staff morale– Decreased short-term absenteeism– Higher productivity– Improved public image– Widened customer base– Increased breadth of skillsAvoiding ageism in the workplace– Review the wording of job ads toensure they do not contain age discriminatory conditions– Review or draw up workable policies to avoid any inference ofdiscrimination which could be based on age– Agree a fair and consistent retirement policy with employees.The policy should not impose a ‘normal’ or contractual retirement age unlessthere are particular business circumstances which provide an objectivejustification, and should include the use of flexible, extended or phasedretirement options and/or flexible work patterns such as part-time work, jobsharing and secondments – Regularly analyse the age profile of the business to assessthe age diversity of the workforce– Review pay, incentive and reward schemes to ensure theyobjectively and fairly reward skill and productivity, rather than longevity– Review redundancy selection criteria and policies to ensurepeople are not selected for age-related reasons Previous Article Next Articlelast_img read more