Weekly dilemma: age discrimination and service-related benefits

What effect will the age discrimination regulations have on service-related benefits? Are there any examples or suggestions as to how we can justify them?

Many pay schemes or benefits are related to an employee’s age or length of service. For example, an employee may not be eligible for a company car until they have completed four years’ service, or an employee may only be eligible to join a private healthcare scheme up until the age of 60. This will often amount to age discrimination, because younger staff will be less likely to have completed the required length of service than other employees.

The draft regulations contain a number of specific provisions dealing with the use of length of service in employment benefits. These exemptions cover pay and other benefits, such as annual leave and company cars.

Benefits based on a length-of-service requirement of five years or less – the ‘five-year exemption’ – will be exempted from the age discrimination regulations, and will be able to continue. Therefore, any benefit that requires the successful completion of a probationary period will remain lawful. However, the draft regulations provide that after the five-year exemption, employers will need to justify providing a benefit on the basis of rewarding loyalty, recognising experience or motivating their employees.

As far as new starters are concerned, it is clearly better not to have staff doing the same job on different terms and conditions, as this could give rise to a whole host of issues.

Alison Loveday is head of employment, Berg Legal

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