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The Actuary The magazine of the Institute & Faculty of Actuaries

Act your age!

Discrimination on the grounds of age (direct or indirect) become illegal in the UK on 1 October 2006 also known as ‘Age Day’. In the US and Europe (with the exception of Ireland), age discrimination regulations currently in place only aim to prevent discrimination against people who may be too old, while UK legislation also covers discrimination against people being too young. The far-reaching nature of the rules is reflected in government guidance notes suggesting ageist jokes in the office could run the risk of being grounds for complaint.
‘You can’t teach an old dog new tricks’ but at least he’s not ‘wet behind the ears’. We have been forever surrounded by ageist idioms and expressions. All signals are pointing to a significant change in the culture of our working environment; this is furthered by Government Actuary’s Department statistics indicating that in 20 years’ time, half of everyone 16 and over will be over the age of 50. However, as with all such pieces of regulation, it is the changes in people’s attitudes that will be the driving force in the impact of its implementation.

Objective justification
Employers can cite ‘objective justification’ as grounds for escaping the legislative provisions. Legislation sets out a series of factors called ‘legitimate aims’ that can be used for justification purposes. It is now essential to consider the discriminatory effects of all your actions, and where necessary, try to find a less discriminatory way of achieving the same results. There is a general feeling that it is better to be safe rather than relying upon exemptions: even the cost of fighting a nuisance claim can be enormous in terms of time, money and management, and should be avoided.
The onus is primarily on the company to prove that they did not discriminate as opposed to the claimant proving that they had. Employees who feel they are victims of age discrimination should first raise a grievance with their employer. However, if the complaint cannot be resolved then a claim should be brought in the employment tribunal within three months. There is no limit on the compensation that may be awarded. It is pertinent here to stress the importance of reviewing interview methodology and training to avoid unconscious (or even conscious) age prejudice slipping through.

Costs of the new regulations
According to a memorandum on the Employment Equality (Age) Regulations 2006, it is expected that companies, over the course of the year, will pay £249m to implement changes to their work practices. The DTI expects that training employees to enforce the new rules may cost up to £370m and they also estimate an additional 8,000 discriminatory claims.
These staggering numbers underline that this is an important business issue. In September, the charity Age Concern received double the number of phone calls from employees who felt they had been sacked on the grounds of age purely because of the looming ‘Age Day.’ The legislation is clearly having a huge effect on employers, albeit this is an example of an undesired effect.
Promotion no longer being offered on the basis of length of service will probably be a common area for claims because in the case of such internal recruitment, people already know the culture of their company and are therefore likely to be much more confident about making claims. With regard to benefits, there is a ‘five-year exemption’ applicable, which means that benefits based on service of five years or less are fair. But for over five years, you need to objectively justify that it is because you are rewarding loyalty, encouraging motivation or recognising merit. Sabbatical schemes would follow similar reasoning.

‘Young and dynamic’
Lack of case-law means that we are essentially in a zone of uncertainty and that for the near future the main advice is to be aware of potential risks. Looking at the Irish experience can help to shed some light on these. Ireland has had age regulations in place since 1998 and provides the closest parallel for the UK regulations. From the experience there, it can be seen that there was a definite rise in employment tribunal cases after the implementation of the legislation.
One Irish case that is frequently quoted relates to Ryanair who lost a case where they were accused of discrimination because their advertisement for a senior manager said the ideal candidate would be ‘young and dynamic.’ Hardly anybody over the age of 40 applied for the job. The word ‘young’ could not be more obviously discriminatory, but even the word ‘dynamic’ has strong connotations of youth and energy. It is therefore important to think carefully when placing adverts, about the candidates that you are trying to attract and whether the overall impression of the advert is targeting a particular age group.

Early retirement
The national default retirement age is now 65: why would you need to retire someone at 60 rather than at 65? An employer might argue it appropriate to refuse to recruit people over 60 where there is a long and expensive training period before starting the job. (If, however, the candidate is within six months of 65, then it falls into the exemptions.)
In general, cost alone cannot justify discrimination. This includes the cost of insurance premiums, which, for workers in certain sectors, can be exceedingly high. Also, an employer must give the employee notice of intention to retire them. This notice must be given not more than one year and not less than six months before the intended retirement date. Employees have the right to request to work beyond 65 and employers will have a ‘duty to consider’ such requests. Pensions provisions have been delayed (until December) in order to give employers the chance to alter their schemes accordingly.

Employees now have more rights and employers have more responsibilities. As recruiters, being the intermediary between potential employee and potential employer, there is a heightened sense of care that needs to be taken. CVs sent to employers now have the date of birth removed. There may be a move towards skills-based CVs so that dates of employment become irrelevant as these may be felt to provide a means of indirect discrimination. But then the problem is raised about finding out gaps in education or employment.
There still remains a need to find a way of providing details of whether someone has six months’ or six years’ experience in a complicated field. It is easier to justify asking for such information when recruiting actuaries than, say, artists. Experience is still a relevant criterion because you still need the most suitable candidates for the job but you need to make sure that you do not bar anyone from applying.
Specifying a required number of years of post-qualification experience (PQE) can be classified as indirect discrimination and in most cases could form the basis of a claim. This means changes in the way job descriptions are written. For example, instead of being able to say three years PQE, this will now have to be spelled out in terms of exactly what experience, skills, and abilities this amount represents. Why shouldn’t someone with one and a half years’ experience or someone with five years’ experience be capable of doing the job? It will still be possible to say that the person must have completed two complete cycles of ICAS if the requirement is for someone who is going to run the ICAS project in the future for you. By requiring two complete cycles you are saying that you want someone who has learnt the basics in one year and, hopefully, discovered the problems in the second year.
As exams structures change and have changed, there is now also a heightened need for phrases like ‘CT series’ to be replaced by ‘CT series or equivalent’ to take account of candidates of all ages. Vacancy adverts and recruitment campaigns will be very much affected and we have to be careful with the language used. It is currently deemed acceptable to ask for qualified actuaries, but unreasonable to say ‘newly qualified’ as this has connotations of a certain age group.
In terms of graduate recruitment, getting in touch with universities and advertising in graduate publications can be considered discriminatory because it targets a particular age group. This is still allowable provided adverts are also aimed at the wider markets, so that knowledge and applications from different age groups are not restricted.
The Recruitment and Employment Confederation says a survey of more than 350 members showed 76% of them had not sought guidance about laws that will change recruitment practices and add age-based harassment to the list of potential offences. Almost 80% were aware of the pending changes but had done nothing about them. If this is the low level of knowledge and compliance in the recruitment industry, who should be in touch with such matters? What does it say about industry in general? Therefore you need to be careful about which recruitment agencies you use. Training your staff as well as providing guidance on this subject is definitely advisable and would be beneficial in the event of a claim arising.

We are keeping a very close watch on what emerges, but until then there is a need for people to be conservative. In essence it remains that the new legislation provides an opportunity: for diversity, for an increased pool of candidates and for skills sets to be the important factors in recruitment.