Age discrimination and the Government’s ‘Youth Contract’

Could the Government be sued over its new ‘Youth Contract’ which rewards employers who take on young workers aged 18-24 with payments of up to £2,275? According to the Daily Telegraph, the Government’s own guidance has warned that companies could be sued for taking part in the scheme 

Having set up the story with the idea that the Government scheme might be scuppered by age discrimination law, the article then quotes three lawyers, two of whom agree (with one exception) that while a claim might be brought, any challenge is unlikely to succeed because the discrimination will be justified.

The exception is Camilla Palmer who is reported as thinking that there may be a good chance of such a case succeeding. Now I think it is fair to say that Camilla Palmer tends to approach employment law from the point of view of the claimant – but there is no denying that she knows her stuff. If she thinks that a claim might stand a good chance, then we cannot dismiss the idea out of hand.

So let’s look at how a discrimination claim could work in this case. The particular part of the scheme at issue is the ‘wage incentive’ offered by the Government. This allows employers to claim money when they have taken on a young person as part of the Government’s Work Programme and the employment has lasted at least 26 weeks.

The discrimination involved here is plain enough. The funding is only available for workers aged 18-24. This means that a comparable worker aged 25 or over will be excluded. The Government’s scheme therefore treats those aged 25 or over less favourably because of the protected characteristic of age.  But that does not mean that the measure is unlawful

Here comes the legal bit…

Although the scheme would fall within the public function provisions of the Equality Act 2010 (S.28 I think) and would seem to be within the scope of the EU Equality Directive (Article 3), age discrimination is different in that there is a defence of justification. Section 13(2) of the Equality Act says that less favourable treatment because of age is not discrimination if it is a ‘proportionate means of achieving a legitimate aim’. Article 6 of the Directive also allows a difference of treatment on the grounds of age that is ‘objectively and and reasonably justified by a legitimate aim, including legitimate employment policy… and if the means of achieving that aim are appropriate and necessary’. Article 6(1)(a) then gives some examples including:

the setting of special conditions on access to employment and vocational training employment and occupation, including dismissal and remuneration conditions, for young people, older workers and persons with caring responsibilities in order to promote their vocational integration or ensure their protection.

I would say that the Government scheme is exactly the sort of thing envisaged by the Directive as legitimate. The Government is faced with a particular problem of youth unemployment which has important social policy implications. It is therefore limiting access to subsidised employment under the Work Programme to young workers in order to ‘promote their vocational integration’  which is Directive speak for ‘help them get a job’.

Of course you can never predict legal outcomes with 100 per cent certainty, but if this scheme were held to be unlawful in itself, I think the Government would be entitled to be both surprised and quite cross.

Are Individual Employers at risk?

The other approach however, is simply to  sue the individual employer for age discrimination. On the face of it, this could be a  more fruitful route because potentially the employer’s objective in employing a younger worker is to obtain a subsidy. This could be seen as using cost to justify discrimination, which – as we know – is currently a bit of a hot issue in discrimination law. In the guidance quoted by the Telegraph, the Government says,   ‘If this happened, an employment tribunal would wish to consider the employer’s reasons for participating in the scheme. Each case will turn on its merits’

That quote is taken from this guidance document which gives an extended – and, I think, pretty sound – explanation of how they expect a tribunal would approach the issue of justification. The key point is that the employer should not be seeking a cheap source of temporary labour, but genuinely trying to create new job opportunities for young people. In other words, the cost saving is merely a factor that allows the employer to meet its aim of providing work for young people. In such circumstances it is surely right that the employer is highly likely to fend off any discrimination claim.

In fact, if we look at the terms and conditions of the scheme we see that the first requirement is that ‘the Employer would not be in a position to employ the individual… without the wage incentive payment’. In other words, an employer cannot advertise for a job and then pick a young worker from among the applicants in order to claim the subsidy. The job has to be created with the scheme in mind. Presumably applicants are then selected from those young people participating in the Work Programme. Surely the chances of a Tribunal finding that this amounts to unlawful discrimination are tiny?

In any event, it strikes me that a legal challenge to an individual recruitment decision is highly unlikely. There won’t be a disappointed 25 year old who didn’t get the job and wants to know ‘why not?’ because no 25 year olds would have been told that there was even a job to apply for. That may not rule out the possibility of a claim, but it certainly reduces the scope for one.

Is the Telegraph article fair?

The Telegraph has taken a rather technical argument and made it sound like there is a real possibility that the Government’s attempts to encourage the employment of young people will be thwarted by discrimination law. This, of course, feeds into the narrative of discrimination law as ‘red tape’ that prevents bsuiness from making common sense decisions.

The technique that the Telegraph has used is to focus on the phrase ‘could be sued’. We lawyers are quite a literal lot, so if we are asked ‘If I do X, could I be sued?’ the correct answer is almost always ‘yes’. You could be sued, because you can be sued for almost anything. Two more important questions are ‘How likely am I to be sued?’ and ‘If I am sued, what are the chances of me winning or losing?’. The lawyers quoted in the article have all made that distinction, saying ‘yes there could be a case’ and then arguing that it will not succeed. Even Camilla Palmer stresses that justification will be a matter for the Tribunal. Never assume that ‘could be sued’ means the same thing as ‘likely to be successfully sued’.

The Telegraph article is not wildly inaccurate – but its headline overstates the risk posed to the scheme. That is a  pity because that could discourage small businesses from taking part.



About Darren Newman

Employment law consultant, trainer, writer and anorak
This entry was posted in Age discrimination and tagged , , , , , , , , . Bookmark the permalink.

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