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Age Discrimination – When It May Be Lawful

Businesses are generally prohibited from discriminating against an employee on the basis of their age

For example, choosing not to interview a candidate because their application suggests they are nearing retirement age is discriminatory. However, unlike other forms of discrimination, in certain circumstances, a business may be able to justify treating employees differently because of their age.

This employment law briefing highlights the most common exceptions.

Service-related benefits

A business is allowed to provide benefits which reward long service. For example, service-based rewards such as:

  • Extra days’ holiday.
  • Incremental pay.
  • Share options.

However, if the benefit is affected by length of service of over five years, the business will need to be able to show that it fulfils a business need, such as encouraging loyalty.

National minimum wage

A business is entitled to follow the national minimum wage rates that exist for different categories of worker:

  • National living wage. For workers aged 25 or over (there is no upper age limit). This was initially set by the government at 50p above the standard adult rate, but is now a separate age-related hourly rate.
  • Standard (adult) rate. For workers aged between 21 and 24 inclusive.
  • Development rate. For workers aged between 18 and 20 inclusive.
  • Young workers rate.Forworkers aged under 18 but above the compulsory school age that are not apprentices.
  • Apprentice rate. For apprentices under 19 years of age or those aged 19 and over but in the first year of their apprenticeship

Redundancy pay

  • Redundancy pay is potentially discriminatory as it is often calculated based on age or length of service. However, a redundancy scheme that is similar to the statutory redundancy pay will not be regarded as discriminatory. A statutory redundancy payment is calculated using a multiplier based on age and length of service.
  • A redundancy scheme that aims to cushion older workers and reward loyalty, particularly where the scheme has the support of the workforce, is unlikely to be discriminatory.

Insurance benefits

Businesses are entitled to provide employees with access to insurance or a related financial service up to the age of 65.

Provision of childcare facilities

A business can provide childcare facilities for employees caring for children in a particular age group (for example, a crèche). The business can also help employees with:

  • The payment of some or all of the cost of child care.
  • Identifying a suitable person to provide child care.

Retirement

There is no longer a default retirement age allowing a business to automatically retire all employees when they reach age 65. Although a business can still have a retirement age that applies to all employees, the business will need to be able to show that the compulsory retirement of an employee achieves a previously identified legitimate aim, or the retirement will amount to age discrimination.

This employment law briefing just provides an overview of the law in this area. For a complete understanding of how it may affect your particular circumstances, please contact a member of our Employment Team for a free initial consultation.