Age concern

The Employment Equality (Age) Regulations will make age discrimination at work unlawful from 1 October. The regulations, which will affect all businesses, including partnerships and limited liability partnerships (LLPs), stipulate that age cannot be a reason for treating some partners more favourably than others, unless you can justify the discriminatory treatment. Age itself is the issue and so the legislation protects both the young and the old.

Many businesses in the building industry operate along partnership lines, formally or informally. They need to assess their legal status and make sure they are ready to comply with the new law as unlimited claims for compensation await the unprepared. Existing partnership agreements offer no defence and may need to be rewritten before 1 October, unless any discriminatory clauses can be justified. Particular concerns for partnerships include:

• Retirement. There is no statutory default retirement age for partners, unlike employees, and any forced retirement of a partner at a particular age will constitute direct age discrimination. While there may be health and safety reasons for retiring infirm partners still active on building sites, the person’s state of health, rather than age, should be the determining factor. Also, there may be alternatives to retirement to consider, such as working more on the administrative side of the business.
• Division of profits. Lockstep arrangements, paying longer-serving partners more than their junior colleagues, will constitute indirect age discrimination, as length of service will be easier for older partners to have acquired.
• Leaving arrangements. Some partnership arrangements treat someone retiring over a certain age more favourably than someone leaving earlier, perhaps for lifestyle reasons. Such preferential treatment is clearly age discriminatory.
• Pensions and flexible working. Pensions are not greatly affected by the regulations, although the fact that people can now draw a pension while they are working may encourage older partners to draw their pensions and work shorter weeks. If a firm allows only older partners to work part time, it might be subject to challenge by younger partners – and it might find it difficult to refuse other requests for flexible working once it has shown its ability to accommodate part-time working.
• Partners based abroad. The regulations protect employees based abroad in certain circumstances. It is unclear whether the same protection will be available to partners. The safest course will be to eliminate age discrimination throughout the partnership.

Both direct and indirect discrimination can potentially be justified if the discriminatory practice is a proportionate means of achieving a legitimate aim. Direct discrimination occurs when someone is treated less favourably because of their age – eg if you must be over 35 to be a partner. Indirect discrimination occurs where a provision criterion or practice is imposed which puts one age group at a disadvantage – eg you must have 10 years post-qualified experience to be a partner, which indirectly discriminates against those aged less than around 35.

An example of a legitimate aim might be encouraging loyalty by offering benefits which increase with length of service (although service-related benefits based on service up to five years are deemed non-discriminatory). In considering whether a legitimate aim is proportionate, it will be necessary to consider whether the discriminatory effect is outweighed by its benefits and whether there is a less discriminatory way of achieving the same aim.

What should you be doing?

All businesses, partnerships and LLPs should review their employee-related practices to remove any age discriminatory terms and practices and to ensure that all policies and procedures address the regulations’ requirements before 1 October. Management and workers alike need to be properly trained to avoid discrimination claims and to assist in defending claims of harassment that do arise. Partners should be particularly wary because they can be personally liable for discrimination and/or harassment carried out by their employees or fellow partners.