Companies in the UK need to embrace the ageing population and take advantage of the skills and experience of older workers to remain competitive. This will require significant adaptations to policies, processes, workflows and corporate culture.
Workers over 50 are generally increasing as a proportion of the UK workforce. This is partly due to a shrinking labour force making companies more reliant on older workers. In addition, employees may want to remain in work beyond traditional retirement ages for many reasons, including insufficient financial planning for retirement.
“Clearing the desk on the day one reaches retirement age is becoming less common,” says Andrew Secker, Partner for law firm Mills & Reeve LLP. “While some may want to reduce the working hours and days to wind down gradually, others may want to stay in the job longer as life expectancy rises,” Secker explains.
Only a minority (31%) of people over 50 want to retire the traditional way, according to a 2018 survey by Aegon and Opinium. At the same time, 70% wanted to work fewer days, 49% wanted pre-retirement period of “lightened workload” and 44% wanted to work fewer hours.
But companies need to tread carefully when accommodating the needs and interests of the older generation to avoid facing age discrimination accusations.
“Treating people of different ages differently can represent direct age discrimination,” Secker says.
“This can be the case if, for example, you choose not to promote a younger employee because you do not believe they could manage people who are older than them,” he explains.
Treating people of different ages equally can represent an act of age discrimination.
“But treating people of different ages equally can also represent an act of age discrimination,” Secker says.
“Failing to adapt performance metrics in relation to age could therefore indirectly discriminate against older workers”.
For example, if a manufacturing business applies performance metrics that are based on speed to everyone at a production line, this could disadvantage older workers, as dexterity generally declines over age,” he explains.
What makes age the most interesting of the protected characteristics is that both direct and indirect discrimination can be objectively justified, meaning the law permits employers to treat staff differently because of age. In part this reflects that because we all age, in theory, if an employer puts in place measures that favour older workers, the natural passage of time will mean that at some point those younger workers will stand to benefit from that favourable treatment.
Therefore, when designing corporate measures or practices to respond to the ageing workforce, employers should positively ask if any different treatment can be justified.
Direct and indirect age discrimination can be justified provided an employer has a legitimate aim (or aims) and the employer’s actions or provision, criterion or practice (PCP) are proportionate means of achieving the aim (or aims) identified.
For direct discrimination, the aim itself (or aims) must relate to social policy, not the private interests of an employer (such as cutting cost or improving profit) to be acceptable.
“In order to be able to justify different treatment, the objective needs to be important enough to warrant discrimination," Secker says. “Also, the measure needs to be rationally connected to the objective. Furthermore, the means adopted are no more than is necessary to achieve the aim,” he adds.
The European Court of Justice has held “Intergenerational fairness” and “dignity” are social policy aims. These have been interpreted to cover sharing out opportunities fairly between generations, rewarding experience or facilitating the participation of older workers in the workplace.
To justify indirect age discrimination, the aims should correlate to the needs/interests of an employer. This could cover making the division of profits fairer, measures to retain staff, workforce planning or maintaining a stable workforce, according to case law.
The following checklist can serve as a practical guide to avoid age discrimination:
Companies should identify how the demands and needs of older workers will impact the organisation.
If you need to introduce new measures:
Identify your legitimate aim(s), ideally social policy
Assess proportionality and impact via equality impact assessment
Consider communication to staff
Document all decisions
Monitor for impact and keep under review.
To ensure efficient succession planning for key employees it is advisable that the company presents alternative employment routes and encourages joint career planning.
“Many older workers want to carry on working and to add value, and recognise that work is good for them, both physically and emotionally,” says Chris Rofe, Senior Vice President, Employee Benefits.
Companies will need to make some adaptations to cater for this increasing share of older employees. For example, different age groups are likely to have different expectations for what medical insurance should cover. While the younger generation may want to include physiotherapy or sport injury protection in their medical insurance, the older generation may feel the need for a policy that covers chronic diseases.
“Medical policies currently don’t cover chronic disease but we are working on it,” says Rofe.
“There is almost a moral pressure to include long-term medical conditions in the policies,” he notes.
“There is a widespread myth that older employees don’t care about benefits, but the offering just needs to be specifically targeted for this group” Rofe says.
For further information please contact:
Chris Rofe, SVP, Employee Benefits
chris.rofe@uk.lockton.com (opens a new window); Tel: +44 (0)20 7933 2876
Or
Andrew Secker, Partner for Mills & Reeve LLP
Andrew.Secker@Mills-Reeve.com (opens a new window); Tel: + (44) (0) 20 7648 9287 (Ext 6287)
