New age discrimination laws begin to kick in ñ financially!

The HR community is feeling the pain of the new age discrimination laws introduced last October, with a significant number of businesses already in receipt of claims according to a study conducted by City law firm Berwin Leighton Paisner (BLP). The law firm surveyed over 50 businesses employing more than 78,000 employees in total from across a range of sectors including finance, manufacturing, retail and the public sector, and established that more than one in ten has already received a claim. This shows that age discrimination is having an immediate impact on the UK workplace, a trend further supported by statistics from the DTI which state that approximately 600 age claims have been made to date.

BLPís findings that so many companies are already in receipt of age claims, means that UK employers are likely to face hefty financial penalties (in the region of 12 million if based on DTIís statistics of age claims received to date!) Employment Tribunal figures show that the average compensation awarded under disability discrimination legislation (where employees face similar obstacles in finding new jobs) is 20,000. As with other discrimination claims, compensation could easily extend well into six figures for high earning employees. In fact, higher compensation may be even more likely for claims of age discrimination if, which is anticipated, such claims are brought by senior employees who may claim that they will not be able to find another job before they retire. And this is all before legal costs themselves which average at 5,800 per claim, according to the Equal Opportunities Commission. So, failure to comply with the new age legislation could result in companies facing major financial risk, and this may just be the tip of the iceberg as employees become much more savvy about their legal rights!

Key findings included:

Companies affected by the new Employment Equality (Age) Regulations:

An overwhelming 73 per cent of respondents said that they have already been affected by the new age regulations.

Beneficiaries of the new age regulation?

Half (50 per cent) of respondents feel the new legislation benefits 'older employees' the most. In fact, the age regulations protect employees of all ages but only one third of respondents felt that all employees are benefited 'equally'.

Has this new legislation impacted businesses positively or negatively?

Only 11 per cent of those surveyed felt the new regulations have had a negative impact on their business, with 36 per cent believing that it has had a positive affect.

Is the UK workplace over regulated?

Over half (55 per cent) of respondents feel that the UK workplace is over-regulated, and is becoming more costly and time consuming for businesses. As a consequence of many new laws thereís a risk that companies may not be able to keep up with the new legislation and fail to implement the necessary measures to ensure compliance. This adopting would put businesses at potentially huge financial risk, particularly given that 11% of respondents have already received age discrimination claims.

Introduction of retirement procedures?

Whilst 68 per cent of businesses have introduced retirement procedures, 32 per cent have yet to do so. Of those businesses who havenít introduced a retirement procedure, a large proportion are small businesses which are likely to have fewer resources available to deal with the administration arising from new legislation. Employers who retire employees without following the correct procedure are at risk of unfair dismissal and discrimination claims so those who have not introduced a policy are exposing themselves to further financial risk.

Request to continue work past retirement age?

Over 40 per cent of respondents have already received requests from employees to work past retirement age. This suggests that many employees do want to continue to work after 65, possibly as a result of increased pressure on pensions. If the government does decide to scrap the concept of compulsory retirement completely (as it has suggested), companies may witness a significant rise in age related issues as their work force ages and claims may rocket.

Specific guidance on what amounts to justifiable discriminatory treatment?

Ageist treatment can be justified by employers but an overwhelming 70 per cent of companies surveyed felt they needed additional guidance as to what amounts to justification.

Rebecca Harding-Hill, a partner in Berwin Leighton Paisnerís Employment, Pensions & Incentives team commented: ìIt is still early days for companies to see the full impact of the new age legislation. However, it is significant that nearly one in ten companies have already received age claims. This suggests that employees are aware of the age regulations and are willing to take action against their employer (or former employer) on the basis of the new legislation. Employeesí increasingly heightened legal awareness could lead to a dramatic increase in claims. Employers are particularly vulnerable with regard to this new area of discrimination law which requires a change in attitude for many. If employers are not on top of the age legislation and all of its ramifications, age claims could result in a significant financial cost for UK businesses.

Even though nearly one third (24 per cent) of the companies we spoke to have welcomed the new legislation as a positive thing for their business, the overwhelming majority (74 per cent) feel that they require a better understanding as to what age related action can be justified under the regulations and what will amount to discrimination. This is a worrying statistic as it means that companies who have every intention of being legally compliant may be exposed through a lack of clarity surrounding the law.

Many of the employers we spoke to felt that age discrimination is yet another piece of cumbersome red tape for them to get their heads around. But there is no room for apathy towards these new laws, and employers must stay ahead of the game. Weíre working with a wide range of organisations ensuring that they are fully up to speed with these new laws. This includes introducing the proper procedures, providing training for managers and putting in place practices to minimise the risk in key areas such as recruitment and the provision of benefits,î concludes Harding-Hill.

Berwin Leighton Paisner will be hosting a seminar on age discrimination on 21 June to discuss:

- trends and practices revealed by the survey
- emerging challenges
- how organisations can ensure they deliver their legal obligations
- the claims that have arisen under the legislation and how to avoid litigation

For further information please contact zhoe.guy@blplaw.com