Studies suggest employers need to be more proactive about age discrimination

A number of recent research studies suggest that age discrimination in employment remains a significant problem, albeit a declining one, especially in formal terms. Employers have not been unduly concerned by the introduction of the age discrimination regulations in October 2006; however, it is important to increase awareness of the need to be proactive about the implications of age discrimination.

On 1 October 2006, the Employment Equality (Age) Regulations 2006 came into force. Heralded as the biggest development in employment law for 30 years, the regulations potentially concern workers of any age; this reflects both the universal nature of age discrimination, and the scope of the regulations’ application across the employment relationship.

Provisions of new legislation

Among other changes provided for under the new legislation, employers are now prohibited from discriminating against employees on the grounds of age in recruitment, promotion and training (UK0603029I). Moreover, employers are obliged to put an end to ‘unjustified’ retirement below the age of 65 years and to consider any employee’s request to continue working beyond retirement age. However, the legislation also includes a number of exemptions designed to allow the continuation of some service-related benefits, as well as most age-related rules and practices in occupational pension schemes.

Research studies

In 2005 and 2006, several major research studies were conducted to assess the extent of potentially discriminatory practices in the workplace and the likely impact of the new regulations.

  • The Department of Trade and Industry (DTI) sponsored case study research into employers’ attitudes and practices concerning the use of age in employment.
  • Together with the Department for Work and Pensions (DWP), the DTI also supported survey research based on a representative sample of organisations with five or more employees.
  • In 2005, the Chartered Institute of Personnel and Development (CIPD), the professional body for those involved in the management and development of people, and the Chartered Management Institute (CMI), the professional managers’ association, commissioned a joint survey of their members.
  • In 2006, the independent research organisation Industrial Relations Services (IRS) also published results of a survey on its subscribers, which consisted mainly of large organisations.

The following sections outline the key findings of these studies.

DTI case studies

In 2005, DTI published its research study The age dimension of employment practices: employer case studies (462Kb PDF). The study investigated employers’ awareness of and preparation for the impending age legislation and was based on 14 case studies of mainly large organisations.

The research found that employers were aware of the prospect of age legislation, but did not consider it to be a high priority issue. This was not merely attributed to the fact that the legislation was not yet in effect, but also because senior managers were already faced with other competing demands. In many cases, a turbulent business context compounded the problems involved in developing an integrated or strategic approach. However, many respondents also felt that it would be unlikely that the legislation would drive major organisational change as long as the retirement age was retained. Retirement and the need to justify service-related pay and benefits schemes were seen as the most important areas of concern.

This also partly explains why public sector employers and large employers were more aware of the legislative proposals, although the greater likelihood of having dedicated equal opportunity staff in such enterprises also contributed to a more formal response. This extended to reviewing recruitment and performance management systems for a potential age bias. However, few instances of more proactive policies concerning age diversity were evident, even where organisations were contending with skills shortage problems.

DWP/DTI survey

The objective of the joint DWP/DTI-funded Survey of employers’ policies, practices and preferences relating to age (464Kb PDF), published in 2006, was to assess the extent of ‘potentially hazardous’ or discriminatory employment practices, through a representative survey of some 2,087 establishments with at least five employees.

The survey found that ‘age played a direct role in a wide range of policies and practices’, most notably in terms of retirement and pensions; however, age-related considerations were also pronounced in recruitment and redundancy decision making, and often significant in training and promotion. For example, although only 6% of establishments specified age limits in their recruitment advertising, 62% mentioned qualifications and 46% included experience requirements which might otherwise indicate or specify a preferred age. Half the application forms also requested data on age. In redundancy, age was directly used as a criterion in 12% of establishments; 28% operated a ‘last in, first out’ policy, while 33% offered enhanced redundancy payments either on the grounds of age or length of service.

Age was also often related to reward systems, particularly in terms of employee benefits. ‘Potentially hazardous’ pay and benefits schemes were deemed to include incremental pay scales, which were found in 36% of establishments, although only 5% of establishments actually extended length of service beyond five years in the same scale – after which the need to objectively justify applies. Informal merit-related or performance-related pay arrangements were also perceived as being risky, given the possibility of managers using age stereotyping and bias; such arrangements were found in 15% of establishments.

Potentially hazardous practices were found to affect the majority of occupations, but those most ‘at risk’ were professional groups. The report concluded that ‘awareness of the draft regulations needs to be raised across all types of establishments’, particularly in the private sector and in small and medium-sized enterprises (SMEs).

CIPD/CMI research

The CIPD/CMI report Tackling age discrimination in the workplace (633 Kb PDF), published in October 2005, was based on survey returns from more than 2,600 managers and personnel practitioners. The report also allowed for some comparisons over time, since it updated and extended a questionnaire used by the author in earlier research for the CMI (see Arrowsmith and McGoldrick, 1996).

The 2005 report concluded that ‘age discrimination remains a significant problem in the workplace’. For example, 59% of respondents cited personal experiences of age discrimination in the workplace, while almost 25% of respondents indicated that they themselves had used age as a criterion in their recruitment and selection decision making. Age stereotypes also strongly persisted, with most managers perceiving reliability and customer commitment to be positively related to age, in contrast with ambition and ability to learn. Moreover, women were characterised as being ‘older workers’ at a younger age than men; thus, the age bias tended to reinforce discrimination on the grounds of sex.

Nonetheless, the report findings suggest that some improvements have emerged in this context between the 1995 and 2005 surveys. For instance, a large decrease was evident in the proportion of managers who believed that they had personally experienced discrimination on the grounds of age, particularly in terms of being ‘too old’ (Table 1). The use of age as a criterion in decision making among managers had also fallen by around a half (Table 2). However, it should be noted that some of these findings reflect compositional factors in the sample, as the earlier research did not extend to dedicated personnel professionals or other members of the CIPD.

Table 1: Perceived experiences of personal age discrimination, %
This table shows that managers were less likely in 2005 to feel that they were subject to age discrimination across employment, especially on the basis of being ‘too old’
  Job application Promotion Training Appraisal Redundancy
Year 1995 2005 1995 2005 1995 2005 1995 2005 1995 2005
Too Young 23 23 30 27 6 3 10 4 5 3
Too old 44 25 24 12 14 8 14 3 15 5

CIPD/CMI, 1995 and 2005

Table 2: Use of age as a criterion in decision-making, %
This table shows a significant fall in the use of age as a criterion by managers in decision-making practices across employment
  Recruitment and selection Promotion Training Redundancy and dismissal
Year 1995 2005 1995 2005 1995 2005 1995 2005
Age as criterion 55 22 29 12 25 10 32 16

CIPD/CMI, 1995 and 2005

The survey results also suggested that organisations are likely to change employment practices in two main areas. Firstly, only 45% of respondents believed they would be able to ‘objectively justify’ service-related benefits, thus suggesting that such benefits are likely to be revised. Secondly, flexible retirement was seen as being critical for the retention of older workers. Only 34% of organisations already offered part-time working arrangements for older workers, while 49% of respondents stated that they would like more flexibility in pension schemes to accommodate such arrangements.

IRS survey

The 2006 IRS survey ‘Moving towards a new age: employers respond to the law’ (IRS Employment Review 855, September 2006) was based on responses from 99 employers drawn from the public sector (33 employers), and manufacturing (27) and non-profit (9) sectors, which altogether employed over 163,000 people. The survey found that almost three quarters of employers were in favour of the new age regulations, although 38% regarded the regulations as being unclear. Half of the respondents considered that the new regulations would bypass their organisation as they were already compliant, while only 17% of the employers believed that age discrimination occurred in their organisation.

However, more in-depth questions found that at least two thirds of the employers planned to implement some sort of change, mainly in terms of ensuring that recruitment and promotion processes were ‘age-blind’. Issues such as promotion, training or harassment were looked at by only a minority of organisations. Overall, 27% of employers reported having already made changes in policies and practices. A quarter of employers reported that employee benefits were now less generous as a result.

Looking ahead to ‘age planning’, only a quarter of respondents had completed an age audit, although a further 42% indicated that this audit was in progress. Nearly three quarters of organisations had analysed their age profiles in the preceding year, and a quarter had identified problems relating to workforce ageing as a result. This mainly concerned the implications of large-scale retirement for succession planning, recruitment and training, and particularly affected the engineering and public sectors, where recruitment freezes have often been in place for some time.

Commentary

Overall, the aforementioned research suggests a degree of somewhat unjustified complacency in relation to the likely impact of the age discrimination regulations. The IRS survey and the DTI’s case study research indicate that employers do not see age discrimination as a major concern or priority issue for their organisations. At the same time, the DTI/DWP survey finds a wide range of potentially hazardous practices, while the CIPD/CMI research shows that, although overt discrimination may be declining, age-based stereotypes still persist. As in most areas of complex labour law, much will depend on how employment tribunals and case law test and interpret the newly adopted legislation.

Reference

Arrowsmith, J. and McGoldrick, A., Breaking the barriers: A survey of managers’ attitudes to age and employment, Institute of Management Research Report, 1996.

James Arrowsmith, IRRU, University of Warwick, UK

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