The government’s own redundancy scheme will be unlawful under the forthcoming age regulations, which were approved by Parliament last week, according to legal experts.
As a result, a large number of UK employers that have based their enhanced redundancy schemes on the Civil Service model could face discrimination claims worth millions when the new laws come into force on 1 October.
In an unexpected change to draft regulations, the final version makes redundancy schemes that offer enhanced versions of the statutory redundancy scheme unlawful unless they can be objectively justified.
This means that if a redundancy plan does not use the same age bands and multipliers as the statutory scheme, it could be held to be discriminatory unless employers can objectively justify it.
Jane Amphlett, partner at law firm Addleshaw Goddard, said the bar would probably be set high when employers try to justify their schemes during legal claims.
“If schemes don’t mirror [the statutory one] it could be expensive. Employers will have to increase payments to match the highest levels paid or they will have to change their terms and conditions, and some employees will lose out,” she said.
Sam Mercer, director of the Employers Forum on Age, has demanded clarification from the DTI on redundancy – the issue in the regulations she said had caused the most anxiety among employers.
“Many organisations will have renegotiated schemes in advance of the regulations,” she said. “They will have given staff notice of their new schemes, yet these could be unlawful.
“The ironic thing is that even the government’s own scheme doesn’t comply.”
A DTI spokesman claimed the Civil Service scheme would not be illegal. And the Cabinet Office said it was reviewing the scheme, “taking into account” the forthcoming age laws.
Alan Johnson responds
How can employers objectively justify their policies?
“Objective justification is a tough test. Employers will need to show that any age-based measure they take is a proportionate way of achieving a legitimate aim. If the legitimate aim can be achieved by non-discriminatory means, this must take precedence. The discriminatory effect of any age-based practice should be significantly outweighed by the benefits of a legitimate aim.”
Alan Johnson, secretary of state for trade and industry
For more from Alan Johnson
Acas released guidelines on age regulations last week