Age Discrimination and Benefits

With the arrival of the Employment Equality (Age) Regulations in 2006 and the later consolidation of all equality measures into the Equality Act 2010 (‘EA’), treating someone differently in a work environment because of their age, without good reason,became unlawful. However, it is recognized that there are some workplace policies, decision etc that, whilst they may theoretically constitute discrimination, should be protected from being the subject of age discrimination claims.

Pay increases and benefits

Where the right to receive a pay increase or a certain benefit is based on age, this will constitute age discrimination and can rarely be justified. However, where the criterion is not age, but length of service, the situation is slightly different. Although this may constitute indirect discrimination – because those who are younger are likely to have been at a company less time – there are two exemptions provided for in the EA. The first exemption applies to a situation where the benefit requires five years service or less, or the pay increase relates to a five-year period or less. This exemption is automatic. The second exemption relates to benefits that require more than five yearsservice and pay ranges of more than five years. Here the employer will need to be able to demonstrate that a business need is being met by having the pay range or benefit policy and that it is objectively justifiable.

Employee share schemes

Employee share schemes are a type of service related benefit that have the potential to fall foul of the EA legislation. However, the five-year automatic exemption will also apply here, to potentially problematic situations, such as a length of service stipulation and any requirement for an employee to remain in employment between the award being given and the benefit taken. In both these cases, if there is a requirement for more than five years in employment/service then there must be a demonstrable business need for that stipulation. The exemption relating to five years of service or less don’t apply to situations where shares are awarded on the basis of an occurrence in the future – such as a stock market flotation – which means objective justification is required if the shares can only be received on retirement. It is also likely to be required where employees can receive shares early where they are to retire at a specified retirement age or later, as this is discriminatory to employees who retire earlier or leave the company early (and before retiring).

Other

Entitlement to statutory benefits such as sick pay and maternity or paternity pay now have no upper or lower limits (previously the minimum age was 16 and the maximum 65).

An employer is lawfully entitled to withdraw life assurance cover from someone who has retired because of ill health, either at 65 or at whatever the retirement age was then the cover was set up.

Making a claim

It is important to bear in mind that a claim for age discrimination may require compliance with the workplace dispute resolution ACAS Code of Practice on Disciplinary and Grievance Procedures (www.acas.org.uk). There can be severe penalties for not following this procedure where required – for both employer and employee – for example, any employee’s award may be reduced by up to 25%.

In a situation where there has been age discrimination, there is potentially no limit to the amount of compensation that can be received. A claim should be brought within three months less one day of the discriminatory treatment.