UCEA/ECU Age Discriminatin Wrking Grup Guidance Age Discriminatin Legislatin 2006 Guidance Nte 1: Pay and Benefits A UCEA Publicatin Scpe f guidance This guidance nte addresses the implicatins f the Emplyment Equality (Age) Regulatins 2006, due t be implemented n 1 Octber 2006, fr pay and benefits arrangements in the higher educatin sectr. The regulatry framewrk As with mst areas f discriminatin law, there are tw ptential types f discriminatin n the grunds f age: Direct discriminatin ccurs where ne persn (the emplyer) treats anther less favurably n the grunds f age. This is lawful nly where the emplyer can bjectively justify age related treatment r practices. Indirect discriminatin ccurs where a prvisin, criterin r practice is applied generally but which disadvantages peple f a particular age grup, whether yung r ld. This can ccur anywhere in the emplyment cycle frm recruitment, thrugh an individual s wrking life, t retirement practices. The Regulatins prvide that bth direct and indirect age discriminatin may be justified bjectively. Objective justificatin means that the emplyer will have t shw that the age discriminatry treatment, plicy r practice is a prprtinate means f achieving a legitimate aim. The DTI s cnsultatin paper states that the test f bjective justificatin will nt be an easy ne t satisfy. Therefre t seek, systematically, t rely n this statutry defence wuld be ptentially hazardus. Higher educatin emplyers are advised t seek t cmply with the spirit, as well as the letter, f the legislative requirements. There are exceptins within the Regulatins t the discriminatin prvisins, as fllws: Where there is a genuine ccupatinal requirement fr a persn f a particular age. On the grunds f psitive actin (i.e. encuraging persns f a particular age r age grup t take advantage f pprtunities fr ding particular wrk where it reasnably appears t the emplyer that this prevents r cmpensates fr disadvantages linked t age). The prvisin f enhanced redundancy payments. Salaries cvered by age related statutry minimum wage and statutry apprenticeship rates. Specific length f service prvisins (see belw). Specific length f service prvisins relating t pay and benefits 1
There is a general prvisin in the Regulatins that it will be lawful t base differences in pay and benefits n length f service, fr a perid f up t five years in all cases, and fr lnger perids where the emplyer can justify that the arrangement fulfils a business need such as encuraging the lyalty r mtivatin, r rewarding the experience f sme r all wrkers. In rder t meet these requirements, emplyers wuld need evidence frm which they can cnclude there is a benefit t the rganisatin such as infrmatin gathered thrugh mnitring, staff attitude surveys r fcus grups. Where this is the case it will be necessary t apply the arrangement equally t all staff ding similar wrk. Implicatins fr pay plicies & practices Jb evaluatin The advice given by yur jb evaluatin scheme prvider shuld address areas f ptential discriminatin and cver tw areas f risk. The first is in the design f the scheme itself. This means ensuring that the factr definitins and supprting guidance n hw t interpret the factrs shuld nt cntain any ptentially discriminatry elements either explicitly r implicitly - in respect f length f service r age. This applies bth t the scheme factrs and t any descriptins f grades r levels that are based upn r supplement the jb evaluatin scheme, fr example jb family grade descriptins. In particular yu will want t check criteria relating t experience t ensure that these are nt effectively length f service related criteria. The secnd area f risk is in the jb evaluatin prcess. In this respect the risks are similar t ther areas f ptential discriminatin and nrmal equality guidelines and safeguards shuld apply, fr example by ensuring that jb analysts and panels are prperly trained. It is nt expected that the jb analysts and panels need t be representative acrss all age ranges, but there shuld be sufficient safeguards t ensure that rles are evaluated purely in respect f the relevant factrs r elements, and nt persnal characteristics such as the rle hlder s age r length f service. In particular, a jb analyst r panel shuld avid taking int accunt supplementary age r service related criteria t infrm the evaluatin f a jb, fr example if nrmal prgressin paths assume that individuals in a particular career family will have reached a certain level by a certain age r within a set perid f service. Similarly, the use f wrds such as senir shuld relate t specific jb requirements described in terms f required skills and cmpetencies, rather than t age r length f service. Whilst the guidance issued by yur jb evaluatin scheme prvider shuld be sufficient t enable yu t ensure the scheme is nn-discriminatry, it is imprtant t ensure that such guidance is fllwed in practice. Pay structures The main issue with respect t the design f a grade structure is the extent t which prgressin is based n length f service r age. Age related pay scales: frm August 2006 there will be n age related pay scales in the natinal agreements. In the small number f cases where institutins still have lcally agreed age related scales, these shuld be reviewed t ensure that they meet the test f being a prprtinate means f achieving a legitimate aim. As mentined earlier this may be a difficult test t pass. The alternative is t cnvert age related scales int length f service related scales s that they will be cvered by the length f service justificatin described belw. Length f service related prgressin: Under the Regulatins, pay structures that are based n autmatic length f service entitlements up t five years are exempt frm the 2
legislatin. This applies t all grades with six pay pints where pay prgressin is annual (i.e. a minimum pint and five additinal pints paid annually). Beynd five years service, additinal annual pay pints are justifiable where the test f fulfilling a business need is met. Case law will test what is legally justifiable in practice. Where prgressin frm ne grade t the next is in practice autmatic n length f service grunds, the same test will apply. Length f service entitlement that acrss the tw grades tgether accunts fr mre than six pay pints, awarded annually, will need t be justified by reference t the business needs f the institutin. Pssible alternatives t annual prgressin thrugh scales f mre than six pints include: Design the grade structure s that n grade has mre than six pay pints. Incrprate prgressin criteria within grades t take int accunt bjective criteria ther than length f service, fr example a cmbinatin f skills, cmpetencies, r utput. Alternatives culd include: Apply cntributin criteria t prgressin thrugh all pay pints in a grade Apply length f service fr the first six pints in a grade, thereafter apply cntributin criteria in relatin t further prgressin thrugh the grade Intrduce prgressin threshlds within the grade, that have the effect f breaking the grade dwn int grups f six r fewer pay pints, with passage ver the threshld determined by criteria ther than length f service. Where there is the ptential fr prgressin between grades that has the effect f extending the number f pay pints beynd six, build in prgressin gateways that cnfirm an individual s suitability t mve thrugh t the next grade, based n their ability t meet the rle requirements fr the grade abve and the respnsibilities they are actually undertaking. Cnsideratin shuld als be given t prgressin criteria that relate t specific jb family career paths. Where annual prgressin is pssible fr perids f five years r mre n service grunds, it may be that this is justifiable fr the specific jb family, even if it des nt apply elsewhere in the institutin. Starting salaries Plicy and practice relating t starting salaries shuld be reviewed. If age is used it must be capable f being justified under the previusly described demanding test as a prprtinate means f meeting a legitimate aim. Where length f service f mre than five years is taken int accunt the test f fulfilling a business need needs t be met. An alternative apprach is t relate starting salaries t criteria that can be identified thrugh the selectin prcess, such as demnstrated cmpetence r skill level. Benefits All benefits shuld be reviewed t check whether they include reference t age related r length f service related entitlement. Where age r length f service related criteria are used these shuld be reviewed and revised where necessary. It is imprtant t be mindful nt just f the need t avid unjustified direct discriminatin, but als the ptential fr indirect discriminatin. 3
Age related benefits: age related benefits need t meet the test f being a prprtinate means f reaching a legitimate aim. There are sme ptential areas f risk that are likely t be f cmmn cncern acrss the sectr. The mst cmmn f these are highlighted belw, but this shuld nt be cnsidered an exhaustive list f all the plicies and practices that shuld be reviewed: Examples f age related benefits include: Access t age related medicals. Age related pre-retirement arrangements. Age related prvisins that fall within the terms f a pensin scheme are excluded frm the Regulatins. Hwever, this exclusin des nt apply t arrangements that are related t retirement, but which are nt part f the frmal scheme prvisins. Nte: Issues relating t pensin schemes and early retirement will be cvered in a separate Guidance Nte. Length f service related benefits: length f service related benefits fr the first five years f service are lawful under the Regulatins. Additinal benefits frm service beynd five years need t be reviewed t cnfirm that the institutin can meet the test f fulfilling a business need. Examples f benefits that may include service related eligibility criteria include: Sick pay Hlidays Other leave prvisins such as maternity, paternity r parental leave Length f service awards: it is anticipated that this benefit can readily be justified n the grunds f rewarding lyalty Sabbaticals Access t wrkplace nurseries Histrical pay prtectin arrangements that prvide different levels f entitlement linked t length f service. As well as benefits that apply under cllective agreements (lcal and natinal), institutins shuld als satisfy themselves that individual arrangements fr senir staff d nt give rise t direct r indirect age discriminatin risks. Recmmended Actins Institutins shuld: Scrutinise all pay and benefit practices, plicies and prcedures t establish whether they cntain age related r length f service criteria. If s, these shuld be reviewed t check whether the criteria used can be justified. If they can, any evidence frm which it can be cncluded there is a benefit t the institutin shuld be identified and dcumented. If they cannt be justified, they shuld be revised, in cnsultatin with relevant stakehlders. Set in place the mnitring systems that will supprt review by age and length f service, as well as the ther mnitring criteria referred t in the 2002 JNCHES guidance n equal pay reviews i.e. gender, race and disability. 4
Cnsider whether it wuld be helpful t include age in any wider equality impact assessment framewrk r prcess that is being develped. Prvide infrmatin and training t apprpriate staff t ensure that n age r service related criteria are used t determine pay r benefits entitlements except where specified in institutinal plicies and prcedures. Integrate age related plicies and gd practices int a brader apprach t equality and diversity; cmmunicate this plicy t all managers and emplyees, and ffer training where necessary. Resurces Equal Pay Reviews: Guidance fr Higher Educatin Institutins. JNCHES, March 2002 (available at www.ucea.ac.uk). Briefing Paper 2: The draft Emplyment Equality (Age) Regulatins - yur chance t cmment. ECU, September 2005 (available at www.ecu.ac.uk). Age and the wrkplace. A guide fr emplyers. ACAS. (available at www.acas.rg.uk) Revised May 2006 UCEA May 2006 5