Leading business groups are warning that age discrimination laws that come into force tomorrow could leave employers vulnerable to legal challenges from staff and even lead to cuts in employee benefits.
The CBI said the reforms, under which employers will no longer be able to discriminate against workers on the grounds of age, or automatically require staff to retire at set ages, represented the "biggest employment law change in years".
Susan Anderson, the CBI's director of human resources policy, said: "The penalties for getting it wrong could be serious, given there is no cap on the compensation that tribunals can award."
Ms Anderson warned that in Ireland, where age discrimination laws have been operating since 1998, a fifth of all cases considered by employment tribunals were now related to age.
Under the new laws, employers will no longer be able to advertise for jobs in a way that could be perceived as age-related, ruling out terms such as "youthful" or "experienced". Companies will not be allowed to set a normal retirement age below 65 and will be required to at least consider requests from staff who want to work beyond this age.
Research published yesterday by Eversheds warned that many employers remained confused about the new rules, with 40 per cent concerned they were at significant risk of a claim. The law firm said many employers did not realise that asking for dates of birth on application forms could lead to a challenge, nor that advertising for staff with minimum periods of experience could also be problematic.
"The recruitment process could become a breeding ground for potential claims," Audrey Williams, an employment partner at Eversheds, said. "The issue of enhanced redundancy payments that many employers offer to older workers is also likely to be a fertile area for age discrimination claims."
Sam Mercer, director of The Employers Forum on Age, said the new laws would jeopardise employee benefits underwritten by insurance companies, such as life cover and income protection. He warned that insurers routinely priced such products according to the age of policyholder, with costs rising for older workers.
The British Chambers of Commerce said the new laws could even lead to a challenge to the National Minimum Wage. It warned that workers aged between 18 and 21, who are entitled to a lower minimum wage than older staff, could sue the Government over the discrepancy.Reuse content