(93-99)

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

(93-99)

Schedule 9 — Work: exceptions
Part 2 — Exceptions relating to age

before he has reached that normal retirement age, this is capable of amounting to age
discrimination and/or unfair dismissal.
761. This exception applies only to employees within the meaning of section 230(1) of the
Employment Rights Act 1996, those in Crown employment, and House of Lords and House of
Commons staff. This paragraph needs to be read closely with the amendments to the unfair
dismissals provisions of Part 10 of the Employment Rights Act 1996, which are amended by
Schedule 8 to the Employment Equality (Age) Regulations 2006 (S.I. 2006/1031) (“the 2006
Regulations) and which amendments will remain in place when this paragraph is commenced.
762. Under paragraph 8(3) retirement is a reason for dismissal only if it is a reason for
dismissal by virtue of Part 10 of the Employment Rights Act 1996. Schedule 6 of the 2006
Regulations (which will remain in place) sets out the procedures that need to be followed by
an employer in order for the reason for the dismissal to be retirement under the sections
inserted into Part 10 of the Employment Rights Act 1996 by Schedule 8 of the 2006
Regulations, and in order for the dismissal to be fair.
763. Background
763. Paragraph 8 preserves the existing exception for retirement currently provided for by
regulation 30 of the 2006 Regulations, and accompanying provisions at Schedule 6 and
Schedule 8 to the 2006 Regulations.
764. Before the coming into force of the 2006 Regulations, the concept of retirement was
not legally defined. Where an employee was either over 65 or the employer’s normal
retirement age, the employee did not have the right to claim unfair dismissal. The employee
could be compulsorily retired once he had reached the employer’s normal retirement age, or
65. The removal of this age cap on the right to claim unfair dismissal was removed by the
2006 Regulations.
765. Compulsory retirement ages are a form of direct age discrimination. Where the
retirement age is below the age of 65 (or the employers normal retirement age if over the age
65) it will need to be objectively justified.
766. The Government considers this exception for retirement ages of 65 and over to be
within the exemption contained in article 6(1) of the Council Directive 2000/78/EC (“the
Directive”) as being justified by reference to a legitimate aim of social policy.
767. The Government’s position is that the default retirement age will remain in place until
such point in the future as evidence shows that it may either be raised, or is no longer
necessary. The Government has committed to review it in 2011, and evidence gathering for
this purpose is already underway
Examples
• An employee has reached the age of 65. Her employer has followed the correct
procedure for the reason for dismissal to be deemed retirement. She is dismissed by
reason of retirement. This is not direct age discrimination.
• An employer dismisses his employee on her 65th birthday by giving her notice, but
does not follow the correct procedure. This is direct age discrimination.
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Schedule 9 — Work: exceptions
Part 2 — Exceptions relating to age

(b)
would, if recruited for the employment, be a relevant worker within
the meaning of paragraph 8.
      (2)
The age limit is whichever is the greater of—
(a)
the age of 65, and
(b)
the normal retirement age in the case of the employment concerned.
      (3)
The reference to the normal retirement age is to be construed in accordance
with section 98ZH of the Employment Rights Act 1996.
Benefits based on length of service
10    (1)
It is not an age contravention for a person (A) to put a person (B) at a
disadvantage when compared with another (C), in relation to the provision
of a benefit, facility or service in so far as the disadvantage is because B has
a shorter period of service than C.
      (2)
If B’s period of service exceeds 5 years, A may rely on sub-paragraph (1)
only if A reasonably believes that doing so fulfils a business need.
      (3)
A person’s period of service is whichever of the following A chooses—
(a)
the period for which the person has been working for A at or above
a level (assessed by reference to the demands made on the person)
that A reasonably regards as appropriate for the purposes of this
paragraph, or
(b)
the period for which the person has been working for A at any level.
      (4)
The period for which a person has been working for A must be based on the
number of weeks during the whole or part of which the person has worked
for A.
      (5)
But for that purpose A may, so far as is reasonable, discount—
(a)
periods of absence;
(b)
periods that A reasonably regards as related to periods of absence.
      (6)
For the purposes of sub-paragraph (3)(b), a person is to be treated as having
worked for A during any period in which the person worked for a person
other than A if—
(a)
that period counts as a period of employment with A as a result of
section 218 of the Employment Rights Act 1996, or
(b)
if sub-paragraph (a) does not apply, that period is treated as a period
of employment by an enactment pursuant to which the person’s
employment was transferred to A.
      (7)
For the purposes of this paragraph, the reference to a benefit, facility or
service does not include a reference to a benefit, facility or service which may
be provided only by virtue of a person’s ceasing to work.
The national minimum wage: young workers
11    (1)
It is not an age contravention for a person to pay a young worker (A) at a
lower rate than that at which the person pays an older worker (B) if—
(a)
the hourly rate for the national minimum wage for a person of A’s
age is lower than that for a person of B’s age, and
(b)
the rate at which A is paid is below the single hourly rate.
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Schedule 9 — Work: exceptions
Part 2 — Exceptions relating to age

Applicants at or approaching retirement age: paragraph 9
Effect
768. As a result of this paragraph it is not unlawful discrimination for an employer to
decide not to offer employment to a person where, at the time of the person’s application to the
employer he is over the employer’s normal retirement age or he is over the age of 65 if the
employer has no normal retirement age.
769. It is also not unlawful to refuse to offer employment where the applicant will reach the
employer’s normal retirement age or the age of 65 (if the employer has no normal retirement
age) within six months of the application for employment.
770. For these purposes, the employer’s normal retirement age must be 65 or over and has
the same meaning as is given in section 98ZH of the Employment Rights Act 1996 (as inserted
by Schedule 8 to the 2006 Regulations).
771. The employees to which paragraph 9 applies are the same group of employees to
which paragraph 8 (exception for retirement) applies. That is to say, employees within the
meaning of section 230(1) of the Employment Rights Act 1996, Crown employees, House of
Lords staff and House of Commons staff.
Background
772. Paragraph 9 preserves the existing exception currently provided for at regulation 7(4)
of the 2006 Regulations.
773. The rationale for this exclusion from the requirement not to discriminate flows from
the rationale for paragraph 8 (exception for retirement). There is little point in requiring an
employer not to discriminate at the point of receiving an application from a prospective
employee when, if he were to employ the person, that person could be retired (without it
amounting to discrimination to do so) within six months of their appointment.
774. The appointment provisions are inextricably bound up with the retirement provisions
and will be reviewed by the Government at the same time as the review of the default
retirement age, planned for 2011.
Examples
• An applicant is 66 years old at the time of applying for a job to work in on
organisation where there is no normal retirement age. It is lawful for the employer to
refuse his application simply on the basis of the applicant’s age.
• An applicant is 69 years and 8 months old at the time of making an application to
work in an organisation that has a normal retirement age of 70. Because the applicant
will reach the age of 70 within 6 months, it is lawful for the employer to refuse his
application.
Benefits based on length of service: paragraph 10
Effect
775. This paragraph is designed to ensure that an employer does not have to justify paying
or providing fewer benefits to a worker with less service than a comparator should such a
practice constitute indirect discrimination on grounds of age. The employer can rely on the
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Schedule 9 — Work: exceptions
Part 2 — Exceptions relating to age

      (2)
A young worker is a person who qualifies for the national minimum wage
at a lower rate than the single hourly rate; and an older worker is a person
who qualifies for the national minimum wage at a higher rate than that at
which the young worker qualifies for it.
      (3)
The single hourly rate is the rate prescribed under section 1(3) of the
National Minimum Wage Act 1998.
The national minimum wage: apprentices
12    (1)
It is not an age contravention for a person to pay an apprentice who does not
qualify for the national minimum wage at a lower rate than the person pays
an apprentice who does.
      (2)
An apprentice is a person who—
(a)
is employed under a contract of apprenticeship, or
(b)
as a result of provision made by virtue of section 3(2)(a) of the
National Minimum Wage Act 1998 (persons not qualifying), is
treated as employed under a contract of apprenticeship.
Redundancy
13    (1)
It is not an age contravention for a person to give a qualifying employee an
enhanced redundancy payment of an amount less than that of an enhanced
redundancy payment which the person gives to another qualifying
employee, if each amount is calculated on the same basis.
      (2)
It is not an age contravention to give enhanced redundancy payments only
to those who are qualifying employees by virtue of sub-paragraph (3)(a) or
(b).
      (3)
A person is a qualifying employee if the person—
(a)
is entitled to a redundancy payment as a result of section 135 of the
Employment Rights Act 1996,
(b)
agrees to the termination of the employment in circumstances where
the person would, if dismissed, have been so entitled,
(c)
would have been so entitled but for section 155 of that Act
(requirement for two years’ continuous employment), or
(d)
agrees to the termination of the employment in circumstances where
the person would, if dismissed, have been so entitled but for that
section.
      (4)
An enhanced redundancy payment is a payment the amount of which is,
subject to sub-paragraphs (5) and (6), calculated in accordance with section
162(1) to (3) of the Employment Rights Act 1996.
      (5)
A person making a calculation for the purposes of sub-paragraph (4)—
(a)
may treat a week’s pay as not being subject to a maximum amount;
(b)
may treat a week’s pay as being subject to a maximum amount above
that for the time being specified in section 227(1) of the Employment
Rights Act 1996;
(c)
may multiply the appropriate amount for each year of employment
by a figure of more than one.
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Schedule 9 — Work: exceptions
Part 2 — Exceptions relating to age

exception as an absolute defence where the benefit is question was awarded in relation to
service of five years or less.
776. If the length of service exceeds five years, the exception applies only if reasonably
appears to an employer that the way in which he uses length of service to award benefits will
fulfil a business need of his undertaking. For example, by encouraging the loyalty or
motivation, or rewarding the experience, of some or all of his workers.
777. Sub paragraph (6) contains provisions which ensure that in calculating an employee’s
length of service previous service is taken into account where that is the result of the operation
of section 218 of the Employment Rights Act 1996 or any other enactment such as an Order
made under section 155 of that Act.
778. Sub paragraph (7) defines what a benefit is and expressly rules out benefits provided
only by virtue of a person’s ceasing to work.
Background
779. The intent is to replicate the effect of regulation 32 of the 2006 Regulations (as
amended by the Employment Equality (Age) Regulations 2006 (Amendment) Regulations
2008).
780. This paragraph enables employers to continue to effect employment planning, in the
sense of being able to attract, retain and reward experienced staff through service related
benefits. This exception cannot be used to justify the level of payments when a worker leaves
as service related termination payments are not a reward for experience from which the
employer can benefit. Therefore, redundancy payment is dealt with separately.
781. Because the longer the period of service is, the harder it is to justify different
treatment, an absolute exception may only apply to length of service of up to five years. The
Government believes that the five year cap makes the exception proportionate.
Examples
• An employer’s pay system includes an annual move up a pay spine, or a requirement
that a certain amount of time must elapse before an employee is entitled to be a
member of an employee benefits scheme. Provided that the pay spine or time it takes
to get the benefit is no longer than five years or can be justified the exception will
apply.
• An employer’s terms and conditions relating to annual leave entitlement, provide that
employees are entitled to an additional five days’ leave after ten years of service. Such
an entitlement will need to be justified as reasonably fulfilling a business need.
The national minimum wage: young workers: paragraph 11
Effect
782. This paragraph allows employers to base their pay structures on the National
Minimum Wage Act 1998 and the National Minimum Wage Regulations 1999 (“the 1999
Regulations”). Employers cannot rely on this exemption, however, if they do not base their
pay structure on the national minimum wage legislation.
Background
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Schedule 9 — Work: exceptions
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      (6)
Having made a calculation for the purposes of sub-paragraph (4) (whether
or not in reliance on sub-paragraph (5)), a person may multiply the amount
calculated by a figure of more than one.
      (7)
In sub-paragraph (5), “the appropriate amount” has the meaning given in
section 162 of the Employment Rights Act 1996, and “a week’s pay” is to be
read with Chapter 2 of Part 14 of that Act.
      (8)
For the purposes of sub-paragraphs (4) to (6), the reference to “the relevant
date” in subsection (1)(a) of section 162 of that Act is, in the case of a person
who is a qualifying employee by virtue of sub-paragraph (3)(b) or (d), to be
read as reference to the date of the termination of the employment.
Life assurance
14    (1)
This paragraph applies if a person (A) takes early retirement because of ill
health.
      (2)
It is not an age contravention to provide A with life assurance cover for the
period starting when A retires and ending—
(a)
if there is a normal retirement age, when A attains the normal
retirement age;
(b)
in any other case, when A attains the age of 65.
      (3)
The normal retirement age in relation to A is the age at which, when A
retires, persons holding comparable positions in the same undertaking are
normally required to retire.
Child care
15    (1)
A person does not contravene a relevant provision, so far as relating to age,
only by providing, or making arrangements for or facilitating the provision
of, care for children of a particular age group.
      (2)
The relevant provisions are—
(a)
section 36(2)(b);
(b)
section 38(1)(c);
(c)
section 41(2)(b);
(d)
section 42(2)(b);
(e)
section 44(2)(b);
(f)
section 45(2)(b);
(g)
section 46(6)(b);
(h)
section 47(6)(b);
(i)
section 54(2)(a);
(j)
section 55(3)(a).
      (3)
Facilitating the provision of care for a child includes—
(a)
paying for some or all of the cost of the provision;
(b)
helping a parent of the child to find a suitable person to provide care
for the child;
(c)
enabling a parent of the child to spend more time providing care for
the child or otherwise assisting the parent with respect to the care
that the parent provides for the child.
      (4)
A child is a person who has not attained the age of 17.
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Schedule 9 — Work: exceptions
Part 2 — Exceptions relating to age

783. This paragraph is designed to replicate the effect of the exemption in regulation 31 of
the 2006 Regulations.
784. This will allow employers to continue to use the development bands of the national
minimum wage without the threat of legal challenge on the grounds of age discrimination.
Examples
• It is lawful for an employer to pay 16-21 year olds a lower rate of minimum wage than
that given to adults, when based on the development bands set out in 1999
Regulations. For example, based on the 2008/09 rates:
– 16-17 a rate of £3.53 per hour
– 18-21 a rate of £4.77 per hour
• Whereas the national minimum wage for those 22 and over is £5.73
• Rather than pay the amounts stated by the 1999 Regulations, this paragraph also
permits an employer to base its pay scales on the development bands and so, for
example, it may pay 16-17 year olds £4 per hour, 18-21 year olds £5 per hour and
those over 22 £6 per hour.
The national minimum wage: apprentices: paragraph 12
Effect
785. This paragraph deals with apprentices. It enables an employer to pay an apprentice
who is not entitled to the national minimum wage (any apprentice who is under 19 or in the
first year of his apprenticeship) less than an apprentice who is entitled to the national
minimum wage (any apprentice who is 19 or over and not in the first year of his
apprenticeship). Employers cannot rely on this exemption, however, if they do not base their
pay structure on the national minimum wage legislation.
Background
786. This paragraph is designed to replicate the effect of the exemption in regulation 31 of
the 2006 Regulations.
Examples
787. It is lawful for an employer to pay an apprentice who is under the age of 19 or in the
first year of his apprenticeship at a lower rate than an apprentice who is 19 or over and not in
the first year of his apprenticeship. For example, based on the 2008/09 rates:
• 18 year old apprentice is not entitled to the minimum wage;
• 19 year old apprentice in the first year of his apprenticeship is not entitled to the
minimum wage;
• 19 year old apprentice in his 2nd year of apprenticeship is entitled to £4.77 per hour
based on the National Minimum Wage Rate for 18-21 year olds.
788. So it is lawful to pay an 18 year old apprentice and a 19 year old apprentice in the first
year of her apprenticeship £5 per hour and to pay a 19 year old in the second year of his
apprenticeship £5.50 per hour.
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