Employers need to consider length of service when calculating benefits.
Pay and benefits that discriminate on the basis of age are unlawful under the Employment Equality (Age) Regulations 2006, unless the employer can rely on an exception in the regulations or show objective justification.
All employment benefits are covered, including non-pay benefits such as annual leave, reductions on certain goods and services, pensions or a company car. The regulations contain specific provisions in relation to occupational pensions, which are not discussed in this article.
Employers will be allowed under the regulations to continue using length of service as a method of calculating benefits, providing it is no longer than five years. If an employer wishes to use this exemption, he or she has either to count only service at or above a particular level or an employee's total service.
Regardless of which method an employer chooses, it will also be allowed to discount certain periods from the calculation if it is reasonable for it to do so. These periods can be periods of absence (including absence that was thought to be permanent at the time) and periods of work that preceded a period of absence.
In discounting periods of absence, an employer must ensure it treats all employees consistently and should not discriminate on other grounds.
An employer should not refuse to count periods of maternity or parental leave, or periods of sickness absence that relate to a disability, when calculating an employee's length of service, because to do so could give rise to other claims of discrimination or detriment.
Where an employee's length of service exceeds five years, an employer will have to show that it "reasonably appears" to it that the criterion of length of service "fulfils a business need" such as encouraging the loyalty or motivation, or rewarding the experience, of some or all of his workers.
Although it is possible for employers to use a range of criteria other than length of service to determine if and when an employee gets a benefit, these will not be exempted under the regulations and any discrimination on the grounds of age must be avoided.