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Standing Committee Debates

Draft Employment Equality (Age) Regulations 2006

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First Standing Committee on Delegated Legislation

The Committee consisted of the following Members:


Mrs. Joan Humble

Baldry, Tony (Banbury) (Con)
Blunt, Mr. Crispin (Reigate) (Con)
†Burt, Lorely (Solihull) (LD)
Clappison, Mr. James (Hertsmere) (Con)
Davey, Mr. Edward (Kingston and Surbiton) (LD)
†Davies, Mr. Quentin (Grantham and Stamford) (Con)
†Flello, Mr. Robert (Stoke-on-Trent, South) (Lab)
†Henderson, Mr. Doug (Newcastle upon Tyne, North) (Lab)
†Heppell, Mr. John (Vice-Chamberlain of Her Majesty’s Household)
†Howarth, Mr. George (Knowsley, North and Sefton, East) (Lab)
†Laing, Mrs. Eleanor (Epping Forest) (Con)
†McCarthy, Kerry (Bristol, East) (Lab)
†McIsaac, Shona (Cleethorpes) (Lab)
Mahmood, Mr. Khalid (Birmingham, Perry Barr) (Lab)
Milburn, Mr. Alan (Darlington) (Lab)
†Prentice, Mr. Gordon (Pendle) (Lab)
†Sutcliffe, Mr. Gerry (Parliamentary Under-Secretary of State for Trade and Industry)
Mark Etherton, Committee Clerk

† attended the Committee

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Monday 27 March 2006

[Mrs. Joan Humble in the Chair]

Draft Employment Equality (Age) Regulations 2006

4.30 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe): I beg to move,

    That the Committee has considered the draft Employment Equality (Age) Regulations 2006.

Good afternoon to you, Mrs. Humble, and to members of the Committee. I am sure that you will keep us in good order as we discuss the regulations. They are the last major stage in our implementation of the European employment directive. They will outlaw unjustified age discrimination in employment and vocational training across England, Scotland and Wales.

The significance of the regulations is huge—ageism will affect more people at some stage in their lives than any other form of discrimination. They are broad in scope and will have far-reaching consequences. It will become unlawful for workers to miss out on recruitment, promotion or training because of prejudice about their age.

As we are living longer and healthier lives, it is essential that the talents of older workers are not wasted. Younger workers also suffer discrimination, meaning that their skills are not recognised and utilised. The regulations will bring in important new rights for everyone, from the 15-year-old paper girl to the 91-year-old customer adviser at B&Q in Wimbledon to the black and minority ethnic doctor whose progress to registrar is hampered by race discrimination and who then finds that age counts against him when applying to be a consultant.

There are obligations for employers and providers of vocational training, but there are also corresponding benefits. While individuals will find increased training opportunities as well as fairer promotion and recruitment practices, employers will find that looking at skills and competence rather than age will allow a better match of skills with jobs. Retaining rather than abandoning older workers will save recruitment costs. It is also good for society, both because it promotes greater equality and because it will have a long-term beneficial impact on the economy. We estimate that the fairer business practices and increased participation in the labour market that will be brought about by the regulations could add up to £2 billion to GDP by 2016. As we have said throughout, tackling age discrimination is good for individuals, business and society. That is a message worth repeating.

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All stages of the employment relationship will be affected by the regulations, including recruitment, selection, promotion and training. Decisions at those stages should primarily be based on the skills required to do the job, not on the age of the applicant or jobholder. The regulations will also apply to access to vocational training and guidance, covering all training that contributes to employability. They will cover all training provided by employers and private training companies and all courses offered by universities, further education colleges and other such institutions. That will create a uniform regime, providing legal certainty for both the institutions and individuals. However, the teaching of pupils in school is excluded as such education is general in nature and does not amount to vocational training in the meaning of the directive.

The regulations have been developed through a process of continuous engagement with our stakeholders: four national consultations, meetings of our age advisory group and many less formal contributions from key stakeholders. That has helped to ensure that the final regulations are clear, effective and workable, and that they strike the right balance between new rights for individuals and allowing business to operate productively and fairly. That balance recognises, as does the directive itself, that there are some circumstances in which it is necessary to make distinctions on the grounds of age. That is why we have made use of the directive’s provisions that allow age-based practices to continue if they can objectively be justified. That is a stiff test, not an excuse for employers to continue outmoded, unacceptable ageism.

We have considered carefully the responses to last year’s “Coming of Age” consultation on the draft regulations. While the overall approach remains unchanged, we have responded by making a number of improvements to ensure that the regulations work effectively and fairly and close unintended loopholes. I cannot cover every issue raised, but I will comment on some of the most important issues and changes.

To begin at the end of the employment story, retirement has been a key issue throughout. We listened to views from all sides before deciding on our approach, which was announced in December 2004. As we outlined then, the regulations will provide for a default retirement age of 65. They will also introduce a new right for employees to request working beyond the normal retirement age, and employers will have a duty to consider such requests. That will help to make retirement an opportunity for constructive dialogue between the employer and the employee from which both can benefit. Many employees will be able to continue in jobs that they are not ready to leave, while employers will benefit from retaining skilled and experienced workers. That will help to promote the culture change that needs to accompany the legislation.

The default retirement age legitimately pursues a number of social policy objectives, but principally work force planning and avoiding an adverse impact on the provision of occupational pensions and other
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work-related benefits. It represents a significant advance for employers with lower retirement ages. They will be able to keep them only if they can objectively justify them. Of course, employers will be free to remove compulsory retirement ages altogether, or to set an age higher than 65. This is all about choice. The idea is not “Work till you drop,” but “Choose when you stop”.

Responses to the “Coming of Age” consultation showed that draft provisions relating to unfair dismissal and retirement were too uncertain and open to challenge. We responded by tightening up the procedures. The result is clarity for employers and fairness for employees. Retirements will be lawful only if they are genuine. Employers will not be able to dress up a dismissal on other grounds as a retirement. If they try to do so, the dismissal will be unfair. Equally, we must ensure that when retirements are genuine and the employers follow the correct procedure, they cannot be challenged in a tribunal.

In December 2004, we announced that the upper age limit for claims of unfair dismissal would be removed. Older workers will have the same right to claim unfair dismissal as their younger colleagues. Unfair dismissal is unfair dismissal whenever it takes place. Employees whose request to continue working is successful will enjoy normal employment rights.

We will monitor the success of the new provisions and review them in 2011. If the evidence shows that we no longer need the default retirement age, the Government will abolish it.

For many people, their retirement is inextricably linked to their pension. The regulations apply to occupational pension schemes and to employer contributions to personal pensions. They do not apply to the state pension, which remains unaffected. It is not the role of this legislation to interfere unnecessarily with pension provision. The regulations allow occupational pension schemes to continue undisturbed as far as possible. However, they do not allow a blanket exemption for all age-related aspects of those schemes.

We have reviewed the rules that typically exist for schemes and we have discussed with pension experts the reasons for those rules. If rules are plainly justified, the regulations permit them to continue. With other rules, employers have the option of objectively justifying them by reference to their particular circumstances or, if they cannot do so, by getting rid of them.

It became clear during the consultation that some exemptions, including in the draft regulations, went further than we intended. We have therefore limited and qualified the exemptions where necessary to avoid their being used to the detriment of workers, and to ensure that justifiable practices can continue. To help businesses and individuals, we shall publish separate guidance on the provisions.

Another concern highlighted by the consultation was that the regulations would remove employment benefits awarded on the basis of length of service. We do not want to stop employers providing those benefits. In most cases, they are a useful and widely
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welcomed way of reflecting experience, encouraging or rewarding loyalty or maintaining motivation. Under the new legislation, any benefit dependent on service of five years or less will be exempt. Bearing in mind the difficulties posed by longer pay scales for women in particular, we believe that five years is a reasonable period within which employers should not have to justify their practices on an individual basis. Benefits dependent on longer service are also exempt as long as they fulfil a business need such as rewarding the loyalty, encouraging the motivation or recognising the experience of workers.

Considerable discussion and speculation surrounded the implications of the age legislation for the statutory redundancy scheme. Since last summer, we have been discussing with key stakeholders the way forward for the scheme. We announced our approach on 2 March in a written statement to the House. Evidence shows that young, prime-age and older workers fall into three distinct economic categories, with older workers in an especially difficult position in the employment market. It is sensible for the level of support provided by the redundancy scheme to reflect those categories. We should retain the three age bands in the current scheme. We have considered that point carefully and I am confident that retaining the age bands is permitted by the directive.

A system using a single multiplier would have left a significant group of older workers substantially worse off than they are at present. I imagine that hon. Members on both sides of the Committee agree that that outcome would not have been acceptable. Even if substantial amounts of money were injected into the scheme to leave older workers no worse off, the enhanced benefits for younger workers would not be justified by their position in the labour market.

As for other statutory payment schemes, the regulations mean that for the first time, the youngest and oldest workers will have access to the payments made by employers to their employees to cover sickness, maternity, paternity and adoption. The lower and upper age limits of 16 and 65, associated with the receipt of statutory sick, maternity, adoption and paternity pay, will be removed, meaning that legislation for all four statutory payments will apply in the same way.

These regulations do not stand alone. They build on the work being done by Age Positive and the national guidance campaigns. They complement also the measures announced in the recent welfare reform Green Paper, specifically those aimed at equalising support available to older people seeking work.

These regulations represent a positive addition to our domestic equality legislation. They will make a practical difference to the lives of millions of people and should be welcomed. I commend them to the Committee.

4.40 pm

Lorely Burt (Solihull) (LD): May I also welcome to the Chair, Mrs. Humble? Given that my party has just elected a 64-year-old leader and has the youngest Members of Parliament in England, Scotland and
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Wales, I am probably quite qualified to speak on this issue. Also, as spokesperson for women and inequalities, I will not forget the middle-aged women among us either. It is good that whatever someone’s age, this legislation will cover their employment protection.

This is one of the most far-reaching pieces of employment legislation for some years. It has great importance, particularly in challenging stereotypes, and as the Minister mentioned, in releasing some of the vast human resources in both the young and the old that we have in this country and that are underestimated.

We do, however, have one or two concerns. It seems that the legislation has been quite seriously watered down from the original Government proposals in 2003. Of course, whether one considers that the regulations have been watered down or been made more business friendly depends on one’s point of view. The legislation is not overly stringent in that, having gone through the consultation process, employers can continue to retire staff at the age of 65. Most length-of-service benefits and redundancy benefits will not need to be objectively justified.

We welcome some of the new provisions in the legislation. In particular, there will no longer be discrimination on recruitment. However, an employer can refuse to appoint a person who is over the age of 65 or within six months of his or her 65th birthday. On dismissal terms, we welcome access to benefits, opportunities, training and promotion. Finally, on retirement terms, we welcome employees having the right to six-months notice and to an appeal process.

The practice of some employers managing older employees out of an organisation will become more time consuming and costly, and so it should be. However, I am concerned that we can still justify direct age discrimination in a way that would not be possible under sex and race discrimination legislation. Article 6 of the directive says that age discrimination

    “will not constitute discrimination, if . . . objectively and reasonably justified by a legitimate aim”.

Paragraph 4.1.16 of the “Coming of Age” consultation states:

    “Economic factors such as business needs and considerations of efficiency may also be legitimate aims. However, discrimination will not be justified merely because it may be more expensive not to discriminate”.

Either the financial impact of discrimination is a legitimate reason for treating people differently on grounds of age or it is not. I look forward to the Minister’s comments on that.

In the press, I have seen interesting speculation about whether the measure will bring in a new era of political correctness. Will ageist jokes be banned in the same way as sexist and racist jokes have been? I hope so. In respect of job applications and so on, directly discriminatory comments such as “five years’ experience” or “over the age of 30” will obviously be banned and we welcome that.

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Employers will also have to think about what indirect discrimination they are building in to job advertisements. What do words such as “energetic” and “fresh” mean? It is difficult to know. We particularly welcome the fact that the proposal will direct the minds of employers on the skills needed for the job rather than on those descriptive words. We welcome the measure.

4.46 pm

Mrs. Eleanor Laing (Epping Forest) (Con): As ever, I shall be interested in what the Minister has to say on the subject. We have had many hours talking about equality legislation in recent months. In principle, of course, we welcome these regulations and will not oppose them. Age discrimination threatens to affect most people; there is only one alternative to getting old and that is not getting old and most of us would prefer the former. But for generations there have been circumstances in which getting over a certain threshold of age has been clearly unfair because all individuals are different in their abilities, their health, their outlook, the job they do, their family circumstances and so on. It is therefore wrong to draw a line at a certain age and say that everyone can or cannot do this or that before or after that age.

Those who read women’s magazines, which is several people in the room—[Interruption.] Some unexpected suspects are owning up. The readers of such magazines know that, thankfully, articles are now appearing telling us that 50 is the new 30 and 60 is the new 40. To a great extent, that is true. In generations gone by, people aged more quickly and the age expectancy of the population was very much lower than it is now. Women in particular, largely thanks to Estée Lauder—I am probably not allowed to say that; in case it looks wrong in print, I point out that it was meant to be a light-hearted remark—find that they do not look the age that their mothers did at the same point in their lives.

Shona McIsaac (Cleethorpes) (Lab): That is due to Botox.

Mrs. Laing: The hon. Lady says that it is due to Botox. It is Botox as well as Estée Lauder, and I make no further comment on that.

It is certainly the case that attitudes to age have changed considerably and so have people’s health and life expectancy, yet until very recently it has been acceptable for employers to advertise jobs, look through a bundle of CVs and say “nobody over 40”, or “nobody over 50”, or, indeed, “nobody under 20”. We all know that if we are to be reasonable and accept everybody as an individual, that does not make sense.

As the Minister said, people often find that age discrimination comes on top of other kinds of discrimination; there is a generation of women who suffered discrimination during their childbearing years simply because they were women of childbearing age. Now, those same women are perhaps in their early 50s; their children are growing up and they are told, “Oh no, if you are over 50 you have no chance of retraining for a job.” That is nonsense, because it is wrong; it is
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also nonsense because our economy and our society require everybody to be able to use their talents, their abilities and their experience to the very limit of their possibilities. To put up a false ceiling and say that when someone reaches the age of 50 or 60 or, indeed, 70, they cannot apply for certain jobs is unacceptable. Therefore, we welcome the proposal.

As ever, I must ask the Minister my usual questions, but first, I turn to the remarks of the hon. Member for Solihull (Lorely Burt) who said that the original draft of the regulations had been watered down or made business friendly, depending on how one looks at it. She implied that “business friendly” is somehow bad and wrong and I make a direct challenge to her on that issue: business friendly is not bad, it is good. If we pass laws in this place that are not business friendly and that damage businesses, they not only damage the employers in businesses, but the employees too.

It is typical of the Liberal Democrats not to see what is happening in the real world. If the hon. Lady wants gold-plated regulations that make it impossible for businesses, especially small businesses, to operate in the real world, she is doing a lot of harm, not only to businesses and employers, but to employees. Unless we have successful businesses, we will not have employees. We will have unemployment, a downturn in the economy and everyone will suffer.It is typical of the Liberal Democrats to be blind to the real world.

I welcome the fact that the Minister has made these regulations more flexible than they were in their first draft, by responding properly and responsibly to the consultation process that the Government rightly undertook before producing the final draft. He has heard me say this so often and I have heard his answer so often, but we will go through it again because we must: I am, as ever, concerned, about any regulation, especially those that do not originate in our legislature but from the European Union or other outside bodies and therefore do not necessarily take into consideration the relationships that we would want to be taken into consideration.

I am always concerned that if too many burdens are put on businesses, especially small businesses, they will go out of business and everyone will suffer. It is vital that we all recognise that. In the debates on the Equality Bill and the Work and Families Bill, we went over the issue again and again. The Minister has been very reasonable in taking on board the points that I have made.

I particularly welcome the default retirement age provisions, which is a good way of doing things. It is right to introduce some flexibility by allowing a right to request postponement; I would say that it is vital, because having a default retirement age allows dignity in how employer and employee deal with one another. Someone might have been capable of doing a job for decades but, on reaching a certain age, he or she is possibly not quite so able. There has to be a point at which the employer, while preserving the dignity of the employee, can say, “There is a default retirement age. Therefore, we have to discuss this,” and an agreement
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can then be reached. If that were not the case, there might be too much pressure from the employer on to the employee.

On the other hand, there may be an employee who has done a job for many decades, and it is irrelevant that he or she has reached a certain age because they are still perfectly good at doing their job. The employer might think, “Oh, it’s unfair to try to force so and so to work past the natural retirement age because he or she might not wish to do so.” The degree of flexibility introduced by the right to request postponement is important because the employee might say, “Actually, I don’t want to retire”, and the employer may well say, “That’s great. I didn’t want to put pressure on you not to retire, but if that suits you and it suits us, then everyone is happy.” It would be ridiculous if people were forced to retire or forced not to retire. Again, it is about flexibility.

We always talk about the work-life balance and flexibility, which are absolutely necessary, particularly as there are thousands of people who had hoped to be able to retire at a certain age—maybe not 65, maybe 60, 61 or some other age—and planned their retirement and invested in a pension. The Minister knows what I am going to say. They then discover that the Chancellor of the Exchequer, through his taxation policies, has taken billions of pounds out of pension funds. They find that the pension that they had saved and worked for for decades, and on which they thought they would be able to rely, has been massively depleted and that they are therefore not in a position to retire as they still need to earn money. It would be appalling to take away their right to work in those circumstances.

Groups who have taken part in the consultation process, such as the Third Age Employment Network and Help the Aged, have expressed considerable concern, with which I have sympathy, that the regulations do not go far enough in certain areas. Rather than take up the Committee’s time by going into detail, I shall anticipate that the Minister will tell me that such matters are being considered in the general equality review that is still under way.

Mr. Sutcliffe: That is the answer, but it is the discrimination law review, not the equality law review.

Mrs. Laing: I thank the Minister for being more accurate. In the other Bills that we have discussed at some length in recent months, I have discovered that that is always the answer to that sort of question. I accept that it is a very reasonable answer and that, as I frequently say, it is much better for the Government to take time to consult and have a review than to rush through legislation that might have faults. I therefore welcome the discrimination law review, and I anticipate many hours of debate on it when it finally comes to a conclusion.

There are a couple of other concerns that I would like to raise. One is on regulation 32(7), which states that

    “‘benefit’ does not include any benefit awarded to a worker by virtue of his ceasing to work for”

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an employer or partnership. Length-of-service benefits given on retirement are thus excluded from exemptions. I appreciate that this is a narrow point, but it is important. I will quite understand it if the Minister wishes to write to me about it rather than answer it straight away. As I have stated, we support the regulations in principle and his answer will therefore not affect whether we vote against them.

Partnerships may not properly have been considered in the regulations. Partners are not employees or employers. There are 20,000 partnerships of chartered accountants. I know that neither they nor solicitors are very popular, but they are all entitled to the same employment rights as everyone else. People who are involved in partnerships—we are talking about hundreds of thousands of people, not a tiny minority—are not properly considered in the legislation. I am sure that the Minister will have an answer to that point.

Having said all that, I commend the Minister for being reasonable—far more so than the Liberal Democrats—in getting the balance between employer and employee right. I hope that the regulations will work, because the intention behind them is good.

5.1 pm

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