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When age discrimination may be lawful

Businesses are generally prohibited from discriminating against an employee on the basis of their age.  This will include choosing not to interview a candidate because their application suggests they are nearing retirement age.  However, unlike other forms of discrimination, in certain circumstances, your business may be able to justify treating employees differently because of their age.  Below are some of the most common exceptions.

Service-related benefits

Your business is allowed to provide benefits which reward long service.  For example, service-based rewards such as:

  • Extra days’ holiday
  • Incremental pay
  • Share options.

However, if the benefit is affected by length of service of over five years, you will need to be able to show that it fulfils a business need, such as encouraging loyalty.

National minimum wage

Your business is entitled to follow the national minimum wage rates that exist for different categories of worker.

Redundancy pay

  • Redundancy pay is potentially discriminatory as it is often calculated based on age or length of service.  However, a redundancy scheme that is similar to the statutory redundancy pay will not be regarded as discriminatory.  A statutory redundancy payment is calculated using a multiplier based on age and length of service.
  • A redundancy scheme that aims to cushion older workers and reward loyalty, particularly where the scheme has the support of the workforce, will not be discriminatory.

Insurance benefits

Your business is entitled to provide employees with access to insurance or a related financial service up to the age of 65.

Provision of childcare facilities

Your business can provide childcare facilities for employees caring for children in a particular age group (for example, a crèche).  You can also help employees with:

  • The payment of some or all of the cost of child care
  • Identifying a suitable person to provide child care.


There is no longer a default retirement age allowing you to automatically retire all employees when they reach age 65.  Although your business can still have a retirement age that applies to all employees, you will need to be able to show that the compulsory retirement of an employee achieves a previously identified legitimate aim, or the retirement will amount to age discrimination. Legitimate aims can include:

  • Promoting access to employment for younger people
  • Efficient planning of the departure and recruitment of staff
  • Sharing employment opportunities fairly between the generations.

Occupational requirements

In limited circumstances, your business can stipulate that, because of the nature of the job in question, only people in a particular age group can do the job.

Positive action

Your business can take positive action if you think any of your employees are disadvantaged or under-represented because of their age.  For example, if the majority of your employees are under the age of 40, you could place a job advert encouraging applications from all age groups, especially applicants over the age of 40.