Employment Equality (Age)Regulations 2006

My Lords, I start by thanking all noble Lords who have contributed to this discussion. I think there has been broad support for the thrust of these regulations, which is very welcome. I will seek to deal with each of the points that have been raised. I thank some noble Lords for the advance notice of the questions and points that were raised. That makes it easier. The noble Lord, Lord De Mauley asked whether the final decision on retirement remained with the employer, and the answer is yes, provided that the six-month notice procedure is followed. So long as it is, the default arrangement is sufficient. There was the issue of whether there need be lots of discussion with individual employees, or whether the employer can reach agreement with employees’ representatives to put in place a policy for the business. Clearly, if an employer wishes to have a mandatory retirement age below 65, they will need to able to objectively justify it otherwise it will be unlawfully discriminatory. An employer whose discussion agreed a retirement age or other policy with employees’ representatives is likely to be in a stronger position in demonstrating that it is justified than one that unilaterally imposed it as a policy, but that is not the whole answer. Individual situations will need to be looked at in their particular circumstances. As to whether the regulations will become a carte blanche for employees to take employers to tribunals, in the light of responses to our consultation on the draft regulations we have tightened up the provisions relating to the new duty to consider procedure and to unfair dismissal. I am grateful again to noble Lords for recognising that it was a very full and effective consultation process. It was clear from the consultation that the regulations provided too much uncertainty and would result in unnecessary tribunal cases. We feel that we have remedied that and provided some certainty. The noble Lord, Lord De Mauley, asked about transitional arrangements, which did not seem to be included. Schedules 7 and 8 contain all the necessary transitional arrangements. They mainly relate to retirement, and deal with the fact that employers will not be in a position to give six months’ notice for dismissals taking place prior to April 2007. The transitional provisions ensure that employers will not have to do anything new before the regulations come into force on 1 October this year. They are based on the requirement to give proper contractual or statutory notice of termination. With regard to whether it is possible to continue with arrangements that employees may have regarding high levels of redundancy pay incentives, such as extra holiday, or whether they might be outlawed, the legislation—which includes exemptions for paid and non-paid benefits—will not outlaw benefits based on length of service. We recognise that such benefits are widely supported and play a positive role in rewarding loyalty, providing incentives and helping motivation. The regulations are framed in such a way that employers are not required to justify every benefit on an individual basis. Perhaps I might take up the point probed by the noble Baroness, Lady Sharp, and the noble Lord, Lord De Mauley, about post-retirement benefits. We see a distinction between exemptions provided for in-service benefits, which reward loyalty and efficiency, and post-retirement benefits. It does not mean that post-retirement benefits are outlawed, but that they are subject to justification under the regulations. Will the regulations prevent employers paying a youth rate to inexperienced employees under 21? No: the exemption in Regulation 31 is deliberately designed to protect employers against challenge where they are using youth rates of the national minimum wage. They cannot discriminate within those bands, and it depends on whether the rates being paid are above the adult rate. Different considerations could apply then, but the broad answer is no. There was also concern that the regulations would equalise statutory redundancy pay across age groups; I think I dealt with that in the presentation. The matter was certainly considered. We believe keeping the bands, but raising both ends, to be consistent with the directive, which is why we proceeded down that path. The noble Lords, Lord De Mauley and Lord Freeman, raised the issue of partnerships. I understand the points that have been pressed, and the very different nature of partnership arrangements from normal employer-employee relationships. The default retirement age cannot extend to partners. Similar considerations apply, for example, to office holders, whose retirement will have to be objectively justified if necessary. We have no plans to issue specific guidance on the nature of partnerships to employment tribunals. We believe that tribunals are experienced in dealing with a wide range of difficult and complex situations. It is wrong to suggest that they would not be able to understand the evidence put to them by partnerships, or apply the law to them. They are perfectly capable of deciding whether a particular age-based practice is objectively justified. Clearly, the existence of an agreement about retirement between partners, properly considered and based on sound business reasons, could help support the partnership’s case on objective justifications, since partners would have been party to discussions and would have agreed to the need for an appropriate compulsory retirement age. An explanation of the test of objective justification will be included in the ACAS good practice guide. I hope that will help. It will be a general example on which organisations will be able to base their own particular objective justifications, although tribunals will not be obliged to take this into account. Partners should be able to challenge their retirement if they feel that they have been discriminated against because of their age, especially if they feel that they are still bringing value to the firm. I was interested to hear the noble Lord, Lord Freeman, say that partnerships are specifically exempt under this legislation in the US. There was some interesting press comment about the number of US law firms in the UK who apparently do not have any retirement age as part of their arrangements. I touched on exemption for service-related benefits earlier. These should be available for in-service benefits. They are widely accepted as playing an important role in rewarding loyalty, recognising experience and encouraging motivation. Payments on retirement are not covered but, as I said earlier, that does not mean that they are outlawed; it depends on their being objectively justified. The noble Baroness, Lady Sharp, raised issues of funding, particularly for universities, indicating that it is difficult to get government grants beyond the age of 55. These regulations cover employment and access to vocational training; funding for training falls outside the scope of the directive and is therefore not affected by it. I think I dealt with the other points raised about in-service benefits. I hope I have been able to cover each of the points raised by noble Lords; I thank them again for their support. This is a very important step forward, which will have wide-ranging benefits for individuals and business. I commend the regulations to the House. On Question, Motion agreed to.