Coming of Age: Consultation on Draft Employment Equality (Age) Regulations 2006

Today I am launching our consultation on draft regulations that will for the first time outlaw age discrimination in employment and vocational training. The Coming of Age consultation will end on 17 October 2005. Subject to parliamentary approval we intend that the legislation should come into force on 1 October 2006, implementing the final strand of the European Employment Directive (Council Directive 2000/78/EC). Age discrimination prevents people of all ages from realising their full potential in the workplace. This in turn prevents employers from getting the best performance out of their business and delivering the best service to their customers. We have consulted over a number of years on our plans for legislation in this area. We have said throughout that tackling age discrimination is good for business, good for individuals and good for society. Age discrimination legislation has far-reaching consequences. It touches on every aspect of the employment relationship either directly when there are specific age-based practices, or indirectly when length of service is involved. It ranges over recruitment, promotion, pay, employment conditions, dismissal, retirement, and occupational pensions. We believe that the policies reflected in the draft Employment Equality (Age) Regulations ensure that individuals benefit from important new rights and opportunities, whilst allowing business to operate productively but fairly. In December 2004 we announced how we would be implementing the legislation in relation to retirement ages. For many businesses this will require a considerable adjustment. Those that set their retirement age below the default age of 65 will have to justify it or change it. We announced also that employers would have a new duty to consider requests from employees to continue working longer. We are confident that this will have the same success as the existing right that parents have to request flexible working, and that it will further change the retirement culture in this country. Retirement should not come as an unexpected surprise. The new duty to consider procedure, therefore, will include new requirements to facilitate planned retirement. Employers will be required to notify employees—at least six months in advance and in writing—of the intended date of retirement and that they can ask to work beyond it. This will avoid uncertainty over retirement and ensure that employees can consider their options in advance, allowing them to plan properly for what is a significant change in their lives. However, growing numbers of firms are already successfully planning their work force without fixed retirement ages, and in the longer term the Government's aim is to move to a position where business does not need to rely on a default retirement age. In 2011 we will review whether the justification for having a default age of 65 still stands. As we said when we announced the retirement age decision last year, failing to provide for a default age could have adverse effects on occupational pensions and other benefits, and many businesses need it for work force planning purposes. We made it clear that the review will be firmly grounded in evidence. It will look at, among other things, the evidence on longevity, and employment patterns of older workers. If the evidence shows that we no longer need the default retirement age we will abolish it. We will also extend employment rights by removing the current upper age limit for unfair dismissal and redundancy rights. This means that older workers will get the same rights to claim unfair dismissal or to receive a redundancy payment as younger workers. However, retirement will not constitute unfair dismissal if it is on or after 65 (or a lower retirement age, if justified) and the employer has followed the duty to consider procedure. We will also be taking steps to gauge stakeholder opinion on changes to the method of calculation of statutory redundancy payments. Many rules in occupational pension schemes are age-based and necessary for their proper operation. The regulations will effectively exempt most age-related rules. Scheme managers will be able to retain age-related rules for which we have not made specific provision, provided they can objectively justify them. The aim is to ensure that age discrimination legislation does not undermine the provision of occupational pensions, or interfere unduly with their normal operation, whilst at the same time ensuring that unjustified age-related practices do not continue. Length of service is often used as a criterion for pay, and for non-pay benefits. This could amount to indirect discrimination if some age groups were more likely to have the necessary length of service than others. Such an approach to pay and other benefits is used widely to motivate staff, reward loyalty, and recognise experience. In those circumstances, therefore, such benefits are likely to be objectively justified. Our aim is, as far as possible, to ensure their continuation, while making plainly unjustified practices open to challenge. The regulations, therefore, provide for exemptions as far as possible—with a specific exemption for length of service requirements of five years or less, and a general provision for longer periods. Length of service requirements that mirror similar requirements in statutory schemes will also be allowed—for example, a contractual redundancy scheme based on length of service but with more generous entitlement than required by law. An age-based approach in respect of other employment practices will be lawful only if the employer can satisfy the stiff test of objective justification. Decisions about recruitment, selection and promotion, for example, should normally be based on candidates' skills and abilities, but there might be exceptional circumstances when an employer can justify age requirements. The legislation will allow for this. The Coming of Age consultation document that accompanies the draft regulations explains what the regulations will cover, why we have taken the approach that we have, and what the legislation will mean in practice. This will help businesses, providers of vocational training, and individuals to prepare for their new responsibilities and rights. I have arranged for copies of the consultation paper and other related documents to be placed in the Libraries of both Houses.