BANKS and other financial institutions are especially vulnerable to legal action under the Employment Equality Age Regulations 2006 that came into effect yesterday, City lawyers say.

These forbid any form of age discrimination in the workplace and are designed to protect older workers from being supplanted by younger, cheaper staff.

Lawyers say that the way in which they are drafted takes no account of the culture on the dealing floor, which inevitably favours the younger operative.

They say that there is no reason why a derivatives dealer, for example, who might previously have accepted that his or her career ended in their mid-30s, cannot bring a damaging action for age discrimination at any age.

Unlike actions for unfair dismissal, where damages are capped at about £60,000, age discrimination actions offer unlimited damages.

Nick Squire, head of the employment team at Freshfields, said: “It’s going to be an issue to a much greater extent in those areas of business where people tend to leave at earlier ages.”

Although there are exemptions, where the employer can show that a degree of age discrimination is entirely sensible, for example for health and safety reasons, these are narrowly drafted and may not cover the culture of the dealing room.

Lawyers are giving warning of a flood of spurious age discrimination cases.

Richard Linskell, an employment partner at Dawsons, the solicitor, predicted: “This will be used as a weapon in the armoury of anyone who wants to increase their compensation.”

Jane Amphlett, head of the discrimination unit at Addleshaw Goddard, said that the culture in the City did not favour retirement at 65:

“People go in young, they work their socks off and they earn large amounts of money. Either they burn out and it’s felt it’s time to leave, or they reach a retirement age of 50 or so.”

Such departures are often handled by back-door means, by reduced bonuses, for example. “Traditionally, because bonus awards are discretionary, it’s been pretty difficult for people to challenge them.”

Yet if an employee can show that his or her bonus appears to be lower than those of younger colleagues, this could form the basis of an action at a tribunal.

Viv de Feu, international head of employment at Eversheds, cites the example of a senior manager of a City organisation aged 55 on a salary of £100,000. He or she is likely to be on a year’s notice, so if made redundant the largest award possible at a tribunal had been £160,000, a year’s salary plus a payment for wrongful dismissal.Under the new legislation, however, they could claim ten years’ salary, £1 million, or more.

Lawyers advise firms to be scrupulous in keeping records on their employees’ output and performance.

EQUALITY LAW WAS BORN YESTERDAY

All discrimination by reason of age is, from October 1, 2006, unlawful, unless it falls within one of the exemptions in the regulations or it can be objectively justified

Source: Addleshaw Goddard

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