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Benefits based on length of service: paragraph 10

Effect

804.     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 because of age. The employer can rely on the exception as an absolute defence where the benefit is question was awarded in relation to service of five years or less.

805.     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.

806.     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.

807.     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

808.     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).

809.     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.

810.     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

811.     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

812.     This paragraph is designed to replicate the effect of the exemption in regulation 31 of the 2006 Regulations.

813.     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 £3.57 per hour

    • —     18-21 a rate of £4.83 per hour

  • Whereas the national minimum wage for those 22 and over is £5.80

  • 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

814.     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

815.     This paragraph is designed to replicate the effect of the exemption in regulation 31 of the 2006 Regulations.

Examples

816.     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 £4.83 per hour based on the National Minimum Wage Rate for 18-21 year olds.

817.     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.

Redundancy: paragraph 13

Effect

818.     This paragraph permits employers to provide redundancy schemes which mirror the statutory redundancy payments scheme contained in Part 11 of the Employment Rights Act 1996 but offer more generous terms.

819.     The statutory redundancy scheme at Part 11 of the Employment Rights Act 1996 (“ERA 1996”) requires an employer to make a payment upon redundancy, the amount of which is dependant upon the employee’s age, length of service, and weekly pay (subject to a cap: see Schedule 227 ERA 1996). The statutory redundancy scheme is lawful under the Directive as it is objectively justified under Article 6.1 of the Directive.

820.     An employer who makes a redundancy payment to an employee in accordance with Part 11 ERA 1996 does not have to justify it. Both the statutory authority exemption (in Schedule 22) and this regulation make it clear that the employer is acting lawfully, even though the payment is calculated using age related criteria.

821.     But this paragraph is not aimed at such employers. The principal object of this provision is to assist those employers who base their redundancy schemes on the statutory scheme but who are more generous than the statutory scheme requires them to be.

Background

822.     This exception is designed to replicate the effect of an existing exemption in regulation 33 of the 2006 Regulations.

Examples

  • An employer may pay qualifying employees an enhanced redundancy payment based on their actual week’s pay rather than the maximum amount as specified in section 227 ERA 1996 (currently £350).

  • So an employee (P) aged 45 with 18 years continuous employment earning £600 a week would receive one and a half weeks pay for each year of employment in which he was not below the age of 41 and one week’s pay for each year of employment in which he was not below the age of 22 so P would receive the following: 3 x (1.5 x £600) + (15 x £600) = £11,700.

  • An employer may pay qualifying employees an enhanced redundancy payment calculated in accordance with section 162 of ERA 1996 but after calculating the appropriate amount for each year of employment, the employer may apply a multiple of two rather than one. So the employer could pay P £23, 400 rather than £11,700.

  • Alternatively, the employer could apply the maximum amount of £350 to P’s payment but apply a multiple of 2 and pay P the following: 2 x 3 x (1.5 x £350) + (15 x £350) = 2 x (£1575 + 5250) = £13650.

Life assurance: paragraph 14

Effect

823.     This paragraph provides an exception for employers who provide life assurance cover to workers who have had to retire early because of ill health.

Background

824.     This paragraph is designed to replicate the effect of the exception at regulation 34 of the 2006 Regulations.

825.     Life assurance cover is usually provided in respect of people below the age of 65 (or the employer’s normal retirement age if different). Such cover is not provided in respect of older people because, as the probability of death increases, it becomes more and more expensive to provide. If employers were no longer able to impose - or had to objectively justify - a “cut off” for the provision of such cover to those who have retired early, there is a real risk they would simply “level down” in other words, they would cease to offer it to anyone. This exception is intended to avoid that happening.

Examples

  • An employer who has no normal retirement age provides life assurance cover to those in his employment which ceases when an employee reaches 65 when an employee retires early due to ill health. This is lawful.

  • An employer who operates a normal retirement age of 70 provides life insurance cover to those in his employment which ceases when an employee reaches the age of 70 when an employee retires early due to ill health.

Child care: paragraph 15

Effect

826.     This paragraph creates an exception from the prohibition of age discrimination in employment and certain other work relationships for benefits which relate to the provision of child care, and to which access is restricted to children of a particular age group. The exception applies not only to natural parents, but also to others with parental responsibility for a child.

827.     The exception covers benefits which relate to the provision of care for children aged up to and including 16.

Background

828.     Following the ruling of the European Court of Justice in Coleman v Attridge Law and another (Case C-303/06), it is direct discrimination for an employer to treat an employee less favourably because of the age of an employee’s child. There is, therefore, a potential impact on the provision of facilities, such as childcare, where access is limited by reference to the child’s age.

829.     The exception will allow employers to continue to offer employees child care facilities based on the age of a child without being open to a challenge of direct discrimination from other employees.

Examples

  • An employer may provide a crèche for employees’ children aged two and under; or a holiday club open only to employees’ children aged between 5 and 9. In each of these examples, the exception will allow an employer to discriminate against employees because of their association with a child who does not fall within the specified age groups.

  • The exception does not apply to employee benefits which do not have a close relationship with the provision of childcare. For example, if an employer offers luncheon vouchers, gym membership or a company car only to those employees with children of a particular age group, the exception does not apply as none of these benefits involves childcare.

  • Neither does the exception apply to benefits conferred as a result of the employee’s employment, but applying directly to the child, where childcare is not involved. For example, an employer may offer private healthcare to employees’ children up to a certain age, or use of the employer’s services (e.g. free train tickets if the employer is a train company) by such children.

Contributions to personal pensions schemes: paragraph 16

Effect

830.     This paragraph gives a Minister the power to specify practices, actions or decisions relating to age in respect of employer contributions to personal pension schemes that an employer can use without breaching a non-discrimination rule.

Background

831.     Exceptions to the non-discrimination rule in relation to age in respect of employer contributions to personal pension schemes are currently set out at Schedule 2 to the Employment Equality (Age) Regulations 2006 (S.I. 2006/1031).

Part 3: Other exceptions

Non-contractual payments to women on maternity leave: paragraph 17

Effect

832.     This paragraph sets out an exception to the prohibitions on pregnancy and maternity discrimination by employers which allows an employer not to offer an applicant or provide an employee who is on maternity leave the benefits of the non-contractual terms and conditions of her employment. It also explains what is and is not covered by this exception.

Background

833.     This paragraph is designed to replicate the effect of provisions in the Sex Discrimination Act 1975. It does for non-contractual terms and conditions of employment relating to pay what is done for contractual terms in clause 73.

Examples

  • An employer would not have to pay a woman on maternity leave a discretionary bonus if the only condition of eligibility for the bonus was that the employee must be in active employment at the time of payment.

  • If a discretionary bonus amounted to retrospective payment for time worked over a specific period (such as the past year) during which a woman took maternity leave, the employer must include any part of that period the woman spent on compulsory maternity leave in calculating the bonus.

Benefits dependent on marital status: paragraph 18

Effect

834.     This paragraph concerns a specific exception to the prohibition of discrimination because of sexual orientation in the field of employment and occupation. The exception concerns the provision of benefits by reference to marital status in respect of periods of service before the coming into force of the Civil Partnership Act 2004. It also concerns benefits restricted to married persons and civil partners.

Background

835.     This exception is currently set out in regulation 25 of the Employment Equality (Sexual Orientation) Regulations 2003, and the intention is to preserve the effect of that regulation.

Examples

  • An example of an employment benefit provided by reference to marital status is an occupational pension scheme which pays benefits to an employee's spouse on the death of the employee, but does not similarly compensate an unmarried employee's partner.

  • A scheme which pays out only to surviving married and civil partners could be indirectly discriminatory because it might disadvantage gay couples, but it is permitted by the exception.

  • A scheme which pays out to surviving married partners must also pay out to surviving civil partners in respect of any employee service since 5th December 2005 (when the Civil Partnership Act 2004 came into force). Provided the scheme does that, the exception allows it, even though it may (directly or indirectly) discriminate by paying out only to married partners for service before that date.

Provision of services, etc to the public: paragraph 19

Effect

836.     This paragraph provides that an employer who provides services to the public at large is not liable for claims of discrimination or victimisation by an employee under Part 5 of the Bill in relation to those services. Rather, where individuals are discriminated against or victimised in relation to those services, they can make a claim in the county court under Part 3. If on the other hand the service differs from that provided to other employees, is provided under the terms and conditions of employment, or the service is to do with training, the individual can bring a claim in an employment tribunal for breach of the provisions in Part 5. These provisions are also applicable to services provided by principals, firms, LLPs and relevant persons (in respect of personal or public office holders).

Background

837.     This clause is designed to replace similar provisions in current legislation and has been extended to partnerships.

Examples

  • If an employee of a car hire company is denied the hire of one of its cars (on the same terms available to the general public) because he is black, the employee must claim under the “services” section of the Bill in the county court, rather than through an employment tribunal under the “work” provisions of the Bill.

  • If the same employee’s employment contract provides that he is allowed to hire the company’s cars at a discount (which members of the public would not get), but the employee is refused the discount when he goes to hire one of the firm’s cars because he is a Muslim, then the employee would be able to make a discrimination claim under clause 39.

Insurance contracts etc.: paragraph 20

Effect

838.     This paragraph applies where annuities, life assurance policies, accident insurance policies or similar matters which involve the assessment of risk are provided in the field of employment. It allows for employers to provide for payment of premiums or benefits that differ for men and women, persons who are or are not married or in a civil partnership, pregnancy or maternity or gender reassignment so far as this is reasonable in the light of actuarial or other reliable data.

Background

839.     This paragraph is designed to replace a similar exception in the Sex Discrimination Act 1975. However it ensures that any employment related insurance benefit is treated similarly to that provided by a financial services provider relying upon the services exception in Part 5 of Schedule 3. It means that where an employer has relied on relevant information, any complaint about discrimination in relation to the policy is to be taken with the insurer, through the county court rather than with the employer through the employment tribunal.

Example

  • An employer makes access to a group insurance policy available as a result of being employed by it. It properly instructs the insurer to draw up the terms on a non-discriminatory basis. An employee or former employee considers that she has been discriminated against under the terms of the policy. Her right of action is against the insurer, rather than against the employer.

Schedule 10: Accessibility for disabled pupils

840.     This Schedule provides for accessibility arrangements for pupils in schools as set out in clause 88.

Effect

841.     Local authorities must prepare written accessibility strategies which will increase disabled pupils’ access to the school curriculum, improve the physical environment for such pupils and improve the provision of information to them. Strategies must be implemented by local authorities after taking account of pupils’ disabilities and preferences expressed by them and their parents. They should be reviewed regularly, and revised if needed.

842.     Local authorities must have regard to the need to allocate adequate resources to implementation of the strategy and use any guidance which may be issued by a Minister of the Crown in England and the Welsh Ministers in Wales.

843.     Schools must develop written accessibility plans which will increase the access of disabled pupils to the school curriculum to disabled pupils, improve the physical environment for such pupils and improve the provision of information to them. Plans must be implemented by schools after taking account of disabled pupils’ disabilities and preferences expressed by them and their parents. They should be reviewed regularly, and revised if needed. Inspections of schools by OFSTED can look at the performance of these duties by schools.

844.     Schools must have regard to the need to allocate adequate resources to the plans.

845.     If the Secretary of State in England or the Welsh Ministers in Wales determine that a maintained school or Academy or local authority has failed to discharge these duties, has acted unreasonably in respect of these duties or has failed to comply with an order of the First-tier Tribunal or the Special Educational Needs Tribunal for Wales, they may give directions to the school or local authority about discharging the duty or compliance with the order. However, a Secretary of State in England may not issue directions if the matter has been, or could have been, referred to the Local Commissioner unless, if the matter has been referred to the Local Commissioner, the school has not complied with any recommendation given.

846.     Paragraph 6 gives a power, in England to a Minister of the Crown, and in Wales the Welsh Ministers, to make regulations to say what is, and is not, education and a benefit, facility or service.

Background

847.     These provisions are designed to replicate the effect of provisions in the Disability Discrimination Act 1995, and require schools and local authorities to plan to make all aspects of school more accessible to disabled pupils, particularly as the requirement to make reasonable adjustments to physical features of premises does not apply to schools.

Example

  • A school discusses with its disabled pupils their needs and requirements in order to help it develop a written accessibility plan. The plan includes a strategy to improve the physical environment of the school by putting in ramps and more easily accessible rooms, putting in hearing loops and producing newsletters in Braille.

Schedule 11: Schools: exceptions

Part 1: Sex discrimination

848.     Part 1 of this Schedule makes exceptions from the prohibition on sex discrimination by schools in clause 85 to allow for the existence of single-sex schools and for single-sex boarding at schools, and to make transitional provisions for single-sex schools which are turning co-educational.

Background

849.     These provisions are designed to replicate the effect of provisions in the Sex Discrimination Act 1975.

Admission to single sex schools: paragraph 1

Effect

850.     This paragraph allows a single-sex school to refuse to admit pupils of the opposite sex. A school is defined as single-sex if it admits pupils of one sex only. This is so even if it admits a small number of pupils of the opposite sex on an exceptional basis or in relation to particular courses or classes only. Limiting those pupils to particular courses or classes is not discrimination. However, other forms of sex discrimination by the school against its opposite-sex pupils would still be unlawful.

Examples

  • A school which admits only boys is not discriminating unlawfully against girls.

  • If the daughters of certain members of staff at a boys’ school are allowed to attend, it is still regarded as a single-sex school.

  • A boys’ school which admits some girls to the Sixth Form, or which lets girls attend for a particular GCSE course not offered at their own school is still regarded as a single-sex school.

  • A boys’ school which admits girls to A-level science classes is not discriminating unlawfully if it refuses to admit them to A-level media studies or maths classes.

  • A boys’ school which admits girls to the Sixth Form but refuses to let them use the same cafeteria or go on the same visits as other Sixth Form pupils would be discriminating unlawfully against them.

Single-sex boarding at schools: paragraph 2

Effect

851.     This paragraph provides that a mixed-sex school some of whose pupils are boarders may lawfully admit only pupils of one sex to be boarders. The exception applies even if some members of the other sex are admitted as boarders, so long as their numbers are comparatively small. It allows a school to refuse to admit a pupil to a boarding place at the time they initially join the school, or to provide them with boarding facilities at a later stage.

 
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Prepared: 4 December 2009