Employment Equality (Age)Regulations 2006

rose to move, That the draft regulations laid before the House on 9 March be approved [21st Report from the Joint Committee and 28th Report from the Merits Committee]. The noble Lord said: My Lords, these regulations 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, introducing important new rights for everyone. People’s perceptions of ageing and old age vary greatly. While a teenager might regard a person in his or her 30s as old, many people in their 70s or 80s do not regard themselves as old and do not wish to be labelled as such. Older people today can expect to live longer than those in the past, and future generations can expect to live longer still. For example, a 65 year-old today can expect to live a further 19 years. By 2051, his counterpart can expect to live a further 21 years, almost double the life expectancy of a 65 year-old man a century earlier. By then, the average woman of 65 can expect to reach almost 90. This legislation, however, is not just about older people; it covers people of all ages. Discrimination itself knows no age barrier, although it is undoubtedly older people who experience it the most. This legislation will have far-reaching consequences, extending important new rights and responsibilities to all individuals and businesses. They are far-reaching and positive consequences, as we have said throughout. Tackling age discrimination is good for individuals, good for business and good for society. This will mean improved opportunities for thousands of individuals who are currently denied work, training or promotion simply because of their age, and bring benefits to employers—mainly due to increases in productivity from the expansion of training—as well as better matching of skills with jobs. This is also good for society, through both promoting greater equality and having a beneficial long-term impact on the economy. We estimate that fairer business practices and increased participation in the labour market brought about by these regulations could add up to an extra £2 billion to GDP by 2016. However, the regulations are not just about employment: they will also apply to access to vocational training and guidance, covering all training that contributes to employability. That means all training provided by employers and private training companies, as well as all courses offered by universities, further education colleges, and other such institutions. A uniform regime will be created, providing legal certainty for both institutions and individuals. The teaching of pupils in schools, however, is excluded since such education is general in nature and does not amount to vocational training within the meaning of the directive. The regulations have been developed through a process of continuous engagement with our stakeholders, through four national consultations, meetings of our Age Advisory Group, and many less formal contributions from key stakeholders. This has helped to ensure that the final regulations are clear, effective and workable; and strike the right balance between new rights for individuals and allowing business to operate productively and fairly. It is important to recognise that there is a balance to be struck, a fact acknowledged by the directive. There are circumstances in which it is necessary to make distinctions on the grounds of age, which is why we have made use of the directive’s provisions that allow age-based practices to continue if they can be objectively justified. This 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 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 to close unintended loopholes. I cannot cover every issue, but I will comment on some of the most important issues and changes. There has been considerable discussion and speculation surrounding the implications of the age legislation for the statutory redundancy scheme. We have been discussing the way forward on this with key stakeholders since last summer. As announced by the Minister for Employment Relations in a Written Statement in another place on 2 March, evidence demonstrates that young, prime age and older workers fall into three distinct economic categories, with older workers facing a particularly difficult position in the employment market. We believe that it is sensible for the level of support provided by the redundancy scheme to reflect these categories and that we should retain the three age bands in the current scheme. We have looked at this point very carefully and are confident that retaining the age bands is permitted by the directive. The alternative of introducing a system using a single multiplier would have left a significant group of older workers substantially worse off than at present. I imagine that all sides of the House will agree that this would not have been an acceptable outcome. Even if a substantial amount of money were injected into the scheme to leave older workers no worse off, the enhanced benefits to younger workers would not have been justified by their position in the labour market. Others have been concerned that employment benefits awarded on the basis of length of service would be removed by these regulations. We do not want to stop employers providing these benefits. In most cases they are a useful and widely welcomed way of reflecting experience, encouraging or rewarding loyalty or maintaining motivation. Under the regulations, 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. Retirement has been a key issue throughout the development of the regulations. We listened to views from all sides before deciding our approach, 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 their normal retirement age. Employers will have a duty to consider such requests. This will help make retirement an opportunity for constructive dialogue between employer and employee, from which both can benefit. Many employees will be able to continue in jobs they are often not ready to leave, while employers will benefit from retaining skilled and experienced workers. This will help to promote the culture change that needs to accompany the legislation. The default regime is not a national compulsory retirement age. Employers will not have to retire employees once they reach 65—they are free to continue to employ individuals as long as they like. Instead, the default retirement age will allow employers to continue to use retirement as a tool for workforce planning while allowing employees to plan for the future. The upper age limit on claims for unfair dismissal will also be removed, meaning that older workers will get the same rights to claim unfair dismissal as their younger colleagues. The responses to Coming of Age showed that the draft provisions on unfair dismissal and retirement were too uncertain and open to challenge. We have responded, therefore, 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 retirement. If they try to do that, the dismissal will be unfair. Equally, where the retirement is genuine and the employer follows the correct procedure, it cannot be challenged in a tribunal. We will monitor the success of these 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. The regulations will mean also 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 that are associated with the receipt of statutory sick, maternity, adoption and paternity pay will be removed so that the legislation for all four statutory payments applies in exactly the same way to all. The regulations apply also 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 these schemes. We have reviewed the rules that typically exist in schemes and have discussed with pension experts the reasons for those rules. Where 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 own particular circumstances or, if they cannot do so, getting rid of them. It became clear during consultation that some of the exemptions that were included in the draft regulations went further than we intended. We have therefore limited and qualified the exemptions where necessary to avoid them being used to the detriment of workers and to ensure that justifiable practices are able to continue. To help businesses and individuals, we will publish separate guidance on these provisions. These regulations are the final element of our continuing programme to tackle age discrimination in employment and vocational training. They build on the work that is already being done by the Age Positive and National Guidance campaigns. They also complement the measures that were announced in the recent Welfare Reform Green Paper, specifically those aimed at equalising the support available for older people seeking work. The regulations represent a positive addition to our domestic equality legislation. They will make a practical difference to the lives of millions and should be welcomed. I commend them to the House. I beg to move. Moved, That the draft regulations laid before the House on 9 March be approved [21st Report from the Joint Committee and 28th Report from the Merits Committee].—(Lord McKenzie of Luton.)