Age laws could expose UK employers to £73 billion in litigation costs


UK employers could be exposing themselves to a staggering £73 billion worth of claims if they are not fully prepared for the new age legislation, warns the Employers Forum on Age (EFA).

The figures have been complied as part of the EFA’s campaign to encourage employers to take action now to ensure they are ready for age discrimination laws due in December 2006.

The new legislation will make age discrimination in the workplace illegal. Compliance with the legislation is not just about removing age from job application forms but also requires a complete review of employment policy.

For the first time, the new age laws will rank ageism alongside other forms of discrimination, such as sex or race, giving employees the right to bring legal cases against their employers. In the UK today, 14 per cent of UK workers feel they have been discriminated against because of their age – a figure which represents 3,878,000 people.

To illustrate the scale of the problem, the EFA and legal firm Lewis Silkin have drawn up an estimate of the overall, long-term exposure to risk that businesses are facing: if all of these people pursued a claim under the new laws, total payouts could amount to £73 billion. In the first year of the legislation alone, it is estimated that UK employers could be facing legal claims in the region of £193 million.

To help employers prepare for the legal deadline of December 2006, the EFA is launching 'One Step Ahead', a practical Toolkit designed to ensure that employment decisions and policies are based on ability, not age. The Toolkit was developed with some of the UK's leading employers, and is sponsored by The Royal Bank of Scotland Group. It consists of 20 checklists, which cover a range of essential employment issues, including recruitment, training, promotion, harassment, retirement and redundancy.

Howard Davies, chair of the EFA, says: “It is essential that all businesses carry out a policy review now to see where age bias might be lurking. Many employers are under the impression that the 2006 age discrimination legislation will require them to make only minor adjustments to their recruitment and retirement policies - but they are in for a shock. We hope that the EFA Toolkit will be a catalyst for change, helping to take businesses beyond mere compliance with the new laws to the forefront of best practice.”

James Davies, from legal firm Lewis Silkin, the EFA member that calculated these figures, says: “We've looked into the potential implications of the new age discrimination laws - and the results only reinforce the need for employers to take the new legislation seriously. If they are not thoroughly prepared, they will be the ones footing the bill.”

How employers are working towards age diversity
Amanda Jones, Group Diversity Manager at The Royal Bank of Scotland Group, which piloted the Toolkit, said that the toolkit had helped in identifying areas that the company needed to work on.”This positions us well to maximise the business benefits that we so clearly see from having an age-diverse workforce and from recognising diversity in our customer base,” she said.

Many other leading UK businesses including BAA, Manpower, Centrica, the Department of Work and Pensions, HM Land Registry, GlaxoSmithKline, Marks & Spencer and Tesco are already taking proactive, preventative measures by implementing the Toolkit.

“Processes to identify potential discrimination had focused on minority groups in the past”, says Stephen Golden, BAA Diversity Manager. “The Toolkit has not only helped us identify the changes we needed to make, but has also encouraged us to communicate the benefits of age diversity in the same ways we have done for other diversity areas.”

Ruth Hounslow, Public Affairs and Corporate Communications Manager at Manpower, says: “To continue recruiting and retaining the best quality candidates for our clients, an age-balanced workforce is essential. Following an age audit, using the EFA's Toolkit, we are reviewing our company age policy and retirement plans, to further ensure the best workers in the labour market are recruited on the basis of skills and ability not age.”

The EFA advises that companies should start by asking the 10 essential questions:

  • Can you justify the use of specified periods of experience (eg. 2 years experience required) in your job adverts?
  • Have you removed age as a selection criteria for redundancy?
  • Do you have evidence that all age groups can access flexible working opportunities?
  • Can you provide evidence that salaries and benefits are not age related?
  • Are you able to monitor by age the drop-out rate from different stages of your selection process?
  • Are you able to collate and analyse information from exit interviews by age?
  • Is the same contractual retirement age applied to everyone in the organisation?
  • Are you aware of different sickness absence rates amongst different age groups?
  • Do you assess the intake of your graduate, fast track or management development programmes for potential age bias?
  • Can you monitor poor performance and age-profile those individuals?