Age discrimination payouts are getting bigger

The cost of ageism to employers is getting higher, according to employment law specialists.

Fox & Partners, a law firm, says the average compensation awarded in successful age discrimination cases increased 624 per cent in 2022-23, to £103,000. The equivalent the previous year was £14,000.

The jump has been spurred by high-value cases involving senior professionals: people whose age and experience means clout in the company, even as it sometimes causes problems.

In one high-profile case, a senior executive who was dismissed from Vesuvius, a FTSE 250 engineering company, was last year awarded £3.2mn for age discrimination. Before showing him the door, his boss delivered a “45-minute lecture” calling the executive “an ‘old fossil’ who did not know how to deal with millennials”.

Issues like these are likely to become more common as the global population ages. By 2050, about one quarter of the OECD population will be over 65 years old.

Cases like the “fossil” highlight the dangers of ignoring potential age discrimination, says Ivor Adair, a partner at Fox & Partners. “There’s a lot of heads in the sand [when it comes to] an ageing workforce and succession planning.” The high value of the awards, Adair says, should serve as a warning to employers of the risks of discrimination against senior staff.

The firm has recently received an “uptick of senior individuals” inquiring about ageism. Most say that redundancy is a “pretext” for wanting to hire “someone younger”.

Yet taking action on alleged age discrimination is not straightforward. “Age is unique” among protected characteristics, says Adair. The decision to retire older workers can be justified if it is a proportionate way to achieve a legitimate aim, but only if that aim has a social policy objective, such as promoting intergenerational fairness.

That is how professional services firms can justify a fixed retirement age for partners, on the grounds it facilitates access to partnership for younger workers. However, the requirements of a justification are not easy to meet. Employers must show they are balancing the interests of those older workers who wish to remain and the effect of mandatory retirement on them, Adair adds. Many older workers may contend that dismissal has in effect ended their career as it is hard to find a job at their age at the same level.

Most cases are settled early, before they reach a tribunal. The rising discrimination compensation is based on just 12 cases in the year to 2023. Emily Andrews, deputy director for work at the Centre for Ageing Better, sees them as a poor measure of “ageism in the workplace” because they are “expensive” and “incredibly time-consuming”.

“Ageism is more pervasive than such small numbers indicate. Only the tiny minority with significant resources can pursue and even fewer succeed,” she adds.

Instead of fretting over litigation, employers should focus on making the most of multigenerational teams, Andrews says, filling skills and labour shortages by removing barriers to recruitment and training. “Multigenerational teams are the most productive and innovative,” she says. Companies may also think about training line managers to look at job design, including flexible working patterns.

Lyndsey Simpson, chief executive of 55/Redefined, a consultancy helping organisations recruit and retain older workers, says the advantages are lower absenteeism and higher loyalty. “With recruitment costs around $4,000 per hire, retaining loyal, experienced employees saves money. Plus, as AI grows, soft skills and emotional intelligence are irreplaceable — and older workers have these in spades. Many have witnessed the first man land on the moon, and all have seen the invention of the internet. They’ve lived through constant change and are built for adaptability.”

Multigenerational workforces are the future. “For the first time, we have five generations working together.” This diversity means employers will need to rethink workplace policies, for example by expanding returner and flexible work programmes beyond parents of young children.

As Simpson points out, diversity is perhaps the wrong prism to view older workers: “Ultimately age is our only truly unifying characteristic — we are all one day older today than we were yesterday.”

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