Contact: Ian Foster, Strategic HR Adviser

1. Introductory Summary

Employment in Hampshire County Council (EHCC) Committee are asked to note this paper and agree to the following proposed recommendations for changes to EHCC:

¬ County Council employees be allowed to work beyond age 65 and hence remove `working beyond 65 is only permitted in exceptional circumstances on the basis of a good business case' to `working beyond age 65 is, if requested, the norm'.

¬ Chief Officer contracts to be formally amended to reflect 65 as the normal age.

2. Background

2.1 Parliament has approved Government proposals to prohibit Age Discrimination in Employment. The Regulations follow on from an earlier consultation document published in July 2003, and implement the European Union Employment Directive 2000/78/EC. They will be implemented with effect from 1st October 2006.

2.2 As life expectancy increases and the birth rate remains low, older people will become an ever more significant proportion of the population and society will increasingly depend upon the contribution they can make. The Government have stated that the best way to offset the impact of future changes in the age structure of society is to reduce levels of inactivity. Around 1 million people choose to work beyond state pension age already and the Government aspires to encourage a further million older workers to do so, thereby maintaining the ratio of workers to non-workers in the economy at about the same in 2050 as it is now.

2.3 In addition to outlawing direct and indirect discrimination, the scope of the new legislation includes

· removal of the upper age limit for unfair dismissal and redundancy

· allowing exemptions for pay and non pay benefits dependant on length of service under five years

· removal of age limits in relation to statutory pay (e.g. sick and maternity)

· removal of lower and upper age limits in the statutory redundancy scheme

· providing exemptions for many age-based rules in occupational pension schemes.

2.4 A detailed examination of Hampshire County Council policies has been undertaken, and the main potential areas for impact are recruitment, training, retirement, redundancy and age related medical screening. This Report looks briefly at each in turn. In general terms, most forms of age discrimination will become unlawful and workers will have the right to request an extension to their normal retirement age. Employers will need to follow new notification procedures in order to ensure that retirement dismissals are fair in law after 1^st October 2006.

2.5 Hampshire County Council has a large number of employees who are already aged over 65 and the practical consequences of this, together with the way the legislation is drafted, mean that Hampshire will not be able to bring about an employee's normal retirement at any age other than 65. `Forced' retirement of those over 65 will be difficult to justify and employees approaching 65 will have the right to request continued working.

3. Opportunities and Risks

3.1 The opportunities for Hampshire as a result of this legislation include

· better use of the wider pool of employees available

· enhanced reputation in the market by adoption of `age positive' policies

· consistency with our other equalities and diversity policies

· consistency with the wider corporate agenda as recruiting and retaining more over 65s enables this section of the population to remain active longer.

3.2 There are however some risks, including the potential for increased liabilities such as

· unfair dismissal claims

· wider eligibility for redundancy and associated costs

· challenges to the notion of a "planned" retirement where an employee suspects that ill health or performance is the real reason for refusal to allow an extension of the retirement date

· potentially lengthy capability proceedings and attempts at redeployment for staff becoming ill and acquiring a disability

· impact on performance and morale of teams where workers are perceived to be continuing in employment beyond the point where they can effectively contribute

· risk of injury and/or ill health to both workers themselves and to clients and service users

Risk management approaches with respect to ill health medical screening are recommended below (5.6.2).

3.3 Working beyond age 65 is likely to become more common and it is recommended that Hampshire moves from a policy of `working beyond 65 is only permitted in exceptional circumstances on the basis of a good business case', to `working beyond age 65 is, if requested, the norm'.

4. Brief Summary of the New Legal Framework

4.1 The legal framework follows that for other unlawful discrimination: direct and indirect discrimination are outlawed, though an "objective justification" defence will be permitted. The defence must be that discrimination is for a "specific and legitimate aim" and the action must be both proportionate and supported by evidence.

4.2 There are specific exemptions in terms of benefits related to length of service (five years or less). If service related benefits have a qualification period greater than five years, they can be justified if the employer believes they "fulfil a business need", e.g. recognise more experience or reward loyalty.

4.3 "Planned" retirements. To ensure that retirement is not an unfair dismissal, the employer must notify the employee between 6 months and 1 year before retirement of the date of their retirement and of their right to request an extension (this then becomes a "planned" retirement and is fair). If an employee requests an extension, the employer must fairly and objectively consider the request and meet with the employee. The employee can appeal against the decision. The retirement does not take effect until this process has been completed. If an employee can demonstrate that the employer's reason was not retirement, but was for some other reason, (e.g. ill health or redundancy), they could claim unfair dismissal.

5. Impact on Hampshire

5.1 Recruitment

5.1.1 Specifying age ranges in adverts or selection criteria will be outlawed (although those aged 65 and over or who are within 6 months of age 65 are exempt). Criteria specifying length of experience may be challenged and would then need objective justification. Current recruitment practices have recently been reviewed and the changes resulting from the implementation of age discrimination legislation will not be significant.

5.2 Training

5.2.1 Provision of training has recently been impact assessed and, with the possible exception of apprenticeship training, the changes resulting from the implementation of age discrimination legislation will not be significant.

5.3 Redundancy

5.3.1 The law will be changed so that a redundancy payment will in future be due to a person aged 65 or over. This will still be subject to a 2 year service requirement. Subject to the two years, a redundancy payment could also be made to a person aged under 18. Age banding to determine statutory redundancy payments will be retained.

5.4 Chief Officer Contracts of Employment

5.4.1 Contracts of employment for Chief Officers that require retirement at age 60 are unlikely to be objectively justified if challenged. This is only likely to give rise to difficulty if a Chief Officer wished to remain in employment beyond age 60. If this should occur an individual variation to the employment contract would be agreed. Chief Officer contractual terms for new appointments now reflect 65 as the normal retirement age.

5.5 Health Screening - Managing the Risks

5.5.1 Health screening on the basis of age alone will be discriminatory and unlawful. Some groups of staff pose a higher risk than others in this regard, and jobs such as School Crossing Patrols, School Escorts, Home Carers and Catering tend to have higher than average numbers of older workers who can be at a higher risk of ill health or injury.

5.5.2 Whilst health screening on the basis of age is not permitted, screening on the basis of a risk assessment, increased sickness absence levels or medically related poor performance is. Use of these indicators and tools will mitigate against some of the risks identified in 2.2 above. However, they need to be applied with care - for example, a blanket risk assessment of staff at age 65 would also be discriminatory since it is still age related. Medical pre screening for new employees is permissible provided it is a requirement for the particular role, and is not applied inconsistently. It may be possible, as case law evolves, to develop a "legitimate and proportionate" case to conduct health screening at age 65, but this is not established at the moment.

5.5.3 Any increase in the need to medically screen employees will have significant impacts on the existing Occupational Health service and these need to be considered.

5.6 Flexible Working and Succession Planning

5.6.1 Enhanced opportunities for flexible working help to reduce the `cliff edge' of retirement, can mitigate the financial consequences of early retirement on employees and are likely to be attractive to people of all ages in both recruitment and retention terms. Hampshire adopts a number of flexible working practices currently, though it is recommended that more extensive use of working at home, job sharing, employment breaks, phased retirement and part time working be considered in a business context.

5.6.2 It is recommended that flexible working considerations be linked in to the work commencing in Human Resources (HR) on Succession Planning, as identified in the HR Strategic Plan.

6.0 Relevant Legislation

1. Employment Directive 2000/78/EC

2. Employment Equality (Age Regulations) 2006

3. Local Government Pension Scheme (Amendment) Regulations 2006

Recommendations

1. That County Council employees be allowed to work beyond age 65 and hence remove `working beyond 65 is only permitted in exceptional circumstances on the basis of a good business case' and replace with `working beyond age 65 is, if requested, the norm'.

2. That Chief Officer contracts be formally amended to reflect 65 as the normal retirement age.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes :

1. Published works.

2. Documents which disclose exempt or confidential information as defined in the Act.

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None.