Ageism proposals raise retirement fears

2003

Millions of older workers will get new rights under proposals unveiled today as part of the UK government’s long-awaited consultation on outlawing age discrimination.

But there are fears that a recommendation to raise the statutory retirement age to 70 is the first step towards raising the state pension eligibility age and forcing employees to work for an extra five years.

The new discrimination laws, which must be in place in the UK by December 2006 to comply with the EU Employment Directive, will require employers rewrite their policies on retirement, redundancy, unfair dismissal and recruitment and will make it unlawful to set age limits in job adverts

“Employers should have no doubt that these age laws are going to require a comprehensive review of all their policies and practice well in advance of 2006,” said Sam Mercer, Director of the Employers Forum on Age (EFA), a leading campaigner on age issues in the workplace.

“One of the key proposals in the consultation will mean the vast majority of employers are no longer going to be able to operate a mandatory retirement age or treat people of different ages differently.”

“This announcement signals the end of employment practice as we know it,” Ms Mercer continued. “The law will soon rank ageism alongside other forms of discrimination in employment, such as sexism or racism, and will present an immense challenge to the way we think about age in the UK.

“Ageist attitudes and practice appear in unexpected places and affect employees of all ages - young as well as old. It is important that the debate on age laws does not simply focus on the over 50s.”

The reaction of business leaders to the proposals was cautious. John Cridland, Deputy Director General of the CBI, warned that businesses risked an explosion of litigation if workers took up any new right to challenge employers if they felt they had been discriminated against because of their age.

"Employers recognise the need to give a clear signal that age discrimination is unacceptable,” he said. “But much more than any previous discrimination law, age discrimination is particularly difficult to define."

Experience from the USA suggests that settlements in age discrimination cases are particularly high because employees can claim compensation for ten or more years’ lost earnings.

Earlier this year, the Employers’ Forum on Age EFA estimated that employers could be exposing themselves to litigation costs of up to £193 million in the first year of the legislation alone.

Although the government has said that it has a “genuinely open mind” about the proposal to raise the default retirement age, it is expected to lead to accusations that this is a first step towards raising the state pension eligibility age and forcing employees to work for an extra five years.

Trade unions have warned that companies will make their staff work for five extra years by basing their pension calculations on a retirement age of 70 and penalising those who choose to retire earlier.

Last year, the Pension Policy Institute said that extending the retirement age to 70 could be the only way to avoid the country's mounting pension shortfall. Adair Turner, the Government's special adviser on pensions, has raised the same idea, leading to suggestions that the government may use anti-ageism legislation as a way of introducing far-reaching change through the back door.