Bankers in the EU now have to beware of how they treat ‘old codgers’ and ‘young whippersnappers’ because of new age discrimination laws in the European Employment Directive. But no matter how careful they are, more litigation is likely, writes Michael Imeson.

What is it?

It is the age discrimination part of the European Employment Directive (2000/78/EC). The directive, which also outlaws discrimination in employment on grounds of sexual orientation, religion or belief and disability, was adopted in November 2000. All member states should have transposed it into national laws by the end of 2003 but a few have yet to implement the age aspects.

In the UK, which was given a deadline extension, the law will come into force on October 1 in the form of the Employment Equality (Age) Regulations.

Who dreamed it up?

The Directorate-General for Employment, Social Affairs and Equal Opportunities of the European Commission, in consultation with member state governments.

What are its main provisions?

The directive makes it illegal for employers to discriminate against older and younger workers. It bans age discrimination in recruitment, promotion and training; it bans unjustified retirement ages of below 65; and it removes the current age limit for unfair dismissal and redundancy rights. It introduces a right for employees to request working beyond retirement age and a duty on employers to consider that request; and a requirement for employers to give employees six months’ notice about their intended retirement date.

What’s in the small print?

There are a number of exemptions. For example, staff can be treated differently if such treatment can be “objectively justified”. What that means is unclear.

What does the industry say?

Officially it is not a big problem, according to the European Banking Federation, Association of German Banks and British Bankers’ Association. Officially, individual banks are all for it. “Age is the one aspect of the diversity agenda that we all experience,” says a Barclays executive with responsibility for diversity. “By breaking through the stereotypes and recognising the opportunities… we can really value the contribution of colleagues, regardless of their age.” Unofficially, it is creating headaches for human resources officials, business managers and in-house lawyers. Certain standard practices – such as retiring staff at 60 when the state retirement age is higher – will no longer be allowed. Plus there is the fear of being challenged in expensive and reputation-damaging employment tribunal cases.

How much will it cost?

As well as implementation and compliance costs, there will be the risk of legal costs and damages. “Compensation in discrimination claims is not subject to financial limits, so the new regulations represent a significant potential liability for financial institutions,” says Jeremy Nixon of law firm Bird & Bird. The UK’s Age Partnership Group, a coalition of government and business organisations set up to help employers change their practices, notes that in the Republic of Ireland, where the directive has been in force for some time, allegations of ageism make up 19% of all formal discrimination claims.

What do the legislators say?

The European Commission says that the directive was necessary because “discrimination can seriously undermine… the full participation of citizens in economic, cultural and social life” and “damage social integration in the labour force and at large”.

The law of unintended consequences

Calling someone “too old” or “too young” could lead to being disciplined or fired, and to the bank landing in court.

Could we live without it?

Yes. But in a Europe that is obsessed with the rights of minorities, it is nice to see a law that will benefit all of us one day.

Rating: 4

Rating scale: 5 = Essential 4 = Useful 3 = Neutral 2 = Unnecessary 1 = Waste of time

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