Source: CPID
Date: May 2006

This factsheet gives introductory guidance. It:

• outlines the decline in formal industrial relations work in organisations
• describes what HR professionals think of as ‘employee relations’
• assesses the state of the employment relationship
• discusses how to secure an engaged workforce and the skills required of employee relations specialists
• includes the CIPD viewpoint.

What is employee relations? 

The term ‘employee relations’ was conceived as a replacement for the term ‘industrial relations’ but it’s precise meaning in today’s workplaces needs clarification. In 2004/5 CIPD undertook research into the changing nature of employee relations work in UK organisations, through interviews with HR and Employee Relations managers to provide a snapshot of current attitudes and practice. The findings are reported in our recent Change Agenda1 and are summarised in this factsheet. 

The decline of ‘industrial relations’ 

‘Industrial relations’ is generally understood to refer to the relationship between employers and employees collectively. The term is no longer widely used by employers but summons up a set of employment relationships that no longer widely exist, except in specific sectors and, even there, in modified form. 

The decline can be measured on a number of different dimensions. From a peak of some 12 million plus, union membership has fallen to around 7 million today. Between 1980 and 2000, the coverage of collective agreements contracted from over three-quarters to under a third of the employed workforce. At the same time, the range of issues over which bargaining took place decreased massively. The Workplace Employment Relations Survey (WERS) 19982 showed that union officials spent most of their time not on negotiating pay and conditions but in supporting grievances on behalf of individual members. Even where collective bargaining continued, its impact on the exercise of management discretion was greatly diminished. 

The shift in the coverage and content of collective bargaining has been reflected in a dramatic reduction in industrial action since 1980. The number of working days lost per 1,000 union members decreased from an annual average of 1,163 in the 1970s to 76 in the 1990s. 

What do employee relations mean for employers? 

Some broad conclusions emerging from research are: 

Employee relations can be seen primarily as a skill-set or a philosophy, rather than as a management function or well-defined area of activity. The emphasis of employee relations continues to shift from ‘collective’ institutions, such as trade unions and collective bargaining, to the relationship with individual employees. The ideas of ‘employee voice’ and the ‘psychological contract’ have been accepted by employers and reflected in their employee relations policies and aspirations (see our factsheet on Managing the psychological contract for more information). Employee relations skills and competencies are still seen by employers as critical to achieving performance benefits through a focus on employee involvement, commitment and engagement. 

Employee relations is seen as strategic in terms of managing business risk: both the downside risk of non-compliance with an expanded body of employment law, and the upside risk of failing to deliver maximum business performance. What is the state of the employment relationship? 

The early findings of the WERS 20043 give a mixed picture of the state of employee relations. Managers in 30 per cent of workplaces report that relations have improved a lot since 1998. However, employees’ views have changed little over the period. Despite the introduction in April 2005 of the Employee Information and Consultation Regulations (see our Employee Information and Consultation Regulations factsheet), the current survey records a decline in the incidence of joint consultative committees. 

A key issue for managers is focus. Are they directing their attention to the issues that will make a real difference to business performance? There is strong evidence that a positive psychological contract with employees will lead to superior economic performance, but managing the psychological contract appears to figure fairly low in the list of management, and specifically of the HR function’s, priorities: in our survey Where we are, where we’re heading4, only one in two respondents placed employee involvement among the top five priorities for the HR function in their organisation. 

What is employee engagement? 

The achievement of business goals and financial returns is increasingly dependent on delivery by front-line employees. ‘Engagement’ has been described as a combination of commitment and organisational citizenship. These are both shown by CIPD surveys to be routine outcomes of a positive psychological contract. 

There is no shortage of evidence about people management policies and practices that contribute to building employee engagement. They include: 

Employee voice: Research for the CIPD by Professor Mick Marchington5 shows that managers are much more convinced than they were a decade ago that involvement produces business benefits. This is confirmed by the range of methods for direct communication and recognising individual employee contribution that HR departments now implement and operate.�
Teamworking: WERS 19982 commented that ‘training, teamworking, supervisors trained in employee relation matters and problem-solving groups are all associated with one another. In combination, this group of practices might be construed as a model of direct employee participation in decision-making.’�
Work-life balance: Policies on work-life balance are being used by employers to underpin positive workplace behaviours. Our various surveys of employee attitudes, for example Guest and Conway6, have underlined the link between work-life balance, commitment and performance, and there is strong support by employers for the current legislation giving employees the right to request flexible working. See our factsheet on Work-life balance for more information on this topic.

There are clear links with the business performance model constructed by John Purcell and his colleagues at Bath University7. The model focuses on the implementation of HR practices by line managers, and on employees’ ability, motivation and opportunity to practise discretionary behaviour. Employee relations can be seen as a critical ingredient in the ‘black box’. 

How do HR professionals display employee relations competencies? 

Communication is the glue that makes policies real and without which they are ineffective. The fact that communication is necessarily a two-way process, involving dialogue rather than simply instruction, is well established. Yet many organisations perform badly in this area, failing to give communication the priority it deserves. 

Getting communication right involves both professionalism and persistence. The qualities required include focusing on positive behaviours and outcomes, taking a positive, problem-solving approach, anticipating problems, recommending solutions and being able to offer sound advice to senior managers about implementation. Negotiating skills are still useful but needed less often. A much wider area of knowledge is now required, along with the skills to apply it, including surveying and interpreting employee attitudes, communications and conflict management. Most important is the ability to ‘fit’ policies and practices to suit the organisation’s goals and the character of its workforce. 

Managing workplace conflict 

Although workplace conflict is no longer reflected in high levels of industrial action, the ability to manage conflict remains a key issue for many organisations. Mediation as a method or technique of resolving workplace issues represents an important shift from the traditional industrial relations framework, with its emphasis on formal discipline and grievance procedures, towards more of a ‘win-win’ approach consistent with the philosophy of HR management. 

The decline of industrial relations means that managers may need to be reminded that employees’ interests are not necessarily identical with those of their employer; that despite the decline in strikes and other forms of industrial action, workplace conflict still needs to be managed; and that HR management philosophies may understate the ‘messy realities’ of managing people. 

What is the continuing value of employee relations? 

To a considerable extent, it is only in the public sector that trade unions retain a measure of their former strength and influence in the workplace. This is partly through the existence of institutions of collective consultation, reinforced by continued reliance in many cases on industry-level bargaining and the public policy emphasis on ‘partnership’. 

Union influence in the private sector, on the other hand, continues to decline. The main areas of the private sector where industrial disputes are still experienced from time to time, for example, public transport, are those where there’s a clear public or political interest and/or the Government is seen as the ultimate ‘banker’. ‘Employee relations’ as a term remains ambiguous, with no clear boundaries. Few organisations outside the public sector now have employee relations departments, and most HR people don’t use the term on an everyday basis. It is not calculated to help managers focus on what they need to know and do to increase performance – the language has echoes of a historical era that offers few insights into contemporary practice. 

The traditional academic models of industrial relations have only limited relevance to what managers do today. Employers are in charge and the role of ‘joint control’ and ‘rule-making’ by employers and trade unions has been substantially replaced by employment regulation and organisational values. Employee relations can nevertheless point to an underlying philosophy and attitudes and skills that are still needed by HR practitioners. The current ‘business partner’ model is helpful in identifying an ‘added value’ framework within which HR practitioners need to operate, but an unreflecting business focus may lead to a neglect of the softer skills, which are essential to managing the employment relationship, and of employee interests and influence. Employers also need HR managers with a positive, ‘can do’ attitude who will resist the temptation to adopt a defensive or compliance-led HR culture. Commitment and engagement are crucial to performance but they are not consistently high enough in the hierarchy of line management – or, often, HR – priorities. The Employee Information and Consultation Regulations may be helpful in raising the profile of employee voice and involvement, but the WERS 20043 findings give little basis for optimism that this will happen. 

More effort needs to be put into training and supporting line managers in, for example, teamworking and change management as the basis for establishing and maintaining motivation and commitment, which is a critical role for employee relations managers. Issues about ‘alignment’ of HR and business strategies have mostly to be resolved within this area. There is too much focus within organisations on strategy formulation and planning, and not enough on implementation and delivery. Managing the employment relationship rests heavily on the shoulders of line managers, but their competence in this area is, in general, seriously neglected. The concept of engagement is helpful in promoting wider interest in the measurement of HR outputs, including through the widespread use of employee attitudes surveys and in performance management/appraisal systems. 

Conclusion 

Engagement offers managers a framework for monitoring a range of indicators, including employee attitudes and behaviours, of the state of the employment relationship. But beyond that, it represents an aspiration that employees should understand, identify with and commit themselves to the objectives of the organisation they work for. What does this mean for employee relations specialists? It means being more strategic and seeing the ‘bigger picture’. It means being familiar with a wide range of techniques and skills, including mediation and communications. But, ultimately, it may also mean asserting more strongly the employee interest and agenda. This may not fit well with a management culture still based on ‘command and control’: it’s a genuinely transformational message. But without some significant progress in this direction, both high-performance working and strategic business partnering are unlikely to succeed (see our factsheets on High performance working and Strategic business partnering for more information on these topics). 

CIPD viewpoint 

CIPD research underlines the continuing significance of good employee relations: 

Managers see employee attitudes and commitment as contributing to business performance via better employee contributions and productivity gains. The psychological contract model, validated by successive employee attitude surveys, suggests that HR practices strongly affect the way people feel about their work. 

The informal climate of involvement and consultation appears to be more strongly associated than collective machinery for negotiation and consultation with employee satisfaction and commitment. Mechanisms in use for employee voice include two-way communications, project teams and joint consultation but there is also growing interest in electronic media, attitude surveys and ‘partnership’. 

The major constraints on employee commitment are lack of skills and enthusiasm on the part of managers and employees. 

References

• CHARTERED INSTITUTE OF PERSONNEL AND DEVELOPMENT. (2005) What is employee relations? Change Agenda. London: CIPD. Available at http://www.cipd.co.uk/changeagendas
• CULLY, M., WOODLAND, S. and O`REILLY, A. (1999) Britain at work: as depicted by the 1998 Workplace Employee Relations Survey. London: Routledge.
• KERSLEY, B., ALPIN, C. and FORTH, J. (2005) Inside the workplace: first findings from the 2004 Workplace Employment Relations Survey (WERS 2004). London: Economic and Social Research Council.
• EMMOTT, M. (2003) HR survey: where we are, where we’re heading. Survey report. London: Chartered Institute of Personnel and Development. Available at http://www.cipd.co.uk/surveys
• MARCHINGTON, M. et al. (2001) Management choice and employee voice. Research report. London: Chartered Institute of Personnel and Development.
• GUEST, D.E. and CONWAY, N. (2004) Employee well-being and the psychological contract: a report for the CIPD. Research report. London: Chartered Institute of Personnel and Development.
• PURCELL, J. at al. (2003) Understanding the people and performance link: unlocking the black box. Research report. London: Chartered Institute of Personnel and Development.

Further reading 

CIPD members can use our Advanced Search to find additional information on this topic. Books DANIELS, K. (2006) Employee relations in an organisational context. London: Chartered Institute of Personnel and Development. Journal articles

• BRADLEY, D. (2004) Polar vision. People Management. Vol 10, No 18, 16 September. p17.
• CRAIL, M. (2005) Beyond dispute? Prospects for workplace peace in our time. IRS Employment Review. No 824, 27 May. pp9-13.
• EGAN, J. (2005) Evolution, not revolution: the changing face of the workplace. IRS Employment Review. No 832, 30 September. pp8-15.

This factsheet was written by CIPD staff.

Source: CPID
Date: May 2006

This factsheet gives introductory guidance. It:

• defines diversity and how it has developed
• discusses the difference between equal opportunities and diversity
• outlines the business case for diversity
• suggests ways in which to manage diversity, with tips for action
• includes the CIPD viewpoint.

This factsheet summarises the key issues on diversity, an area where CIPD has played a central role in setting the agenda and developing debate. It is based on our guide Managing diversity: people make the difference at work – but everyone is different1. It does not cover legal aspects in any depth as these are covered by separate factsheets – see the links within the text below. 

What is diversity? 

People are not alike. Everyone is different. Diversity therefore consists of visible and non-visible factors, which include personal characteristics such as sex, race, age, background, culture, disability, personality and work-style. Harnessing these differences will create a productive environment in which everybody feels valued, their talents are fully utilised and organisational goals are met. 

CIPD defines diversity as valuing everyone as an individual – valuing people as employees, customers and clients. 

But there is no single way of treating employees, as each one will have their own personal needs, values and beliefs. It follows that the notion of best practice, while helpful in a theoretical setting, will not provide all the answers in reality. There are multi-variables and many shades of grey – a fuzzy and complex world that relies on approximate reasoning. 

How the concept has developed 

Changes in the social and economic landscape led to legislation covering equal pay, sex and racial discrimination in the 1970s, followed by disability laws in the 1990s. More recently, discrimination on grounds of sexual orientation and religion has been added to the list covered by the law, at least partly driven by European legislation. All these initiatives were grounded in developing a level playing field for disadvantaged groups; in other words, ending or reducing discrimination and improving social justice. They can therefore be described as being about equal opportunities rather than diversity, and by the 1990s it was being recognised that they had had limited success in achieving their goals. 

In the early 1990s, American writers argued for a shift from equal opportunities to diversity because the equal opportunities approach was insufficiently holistic in its attempts to eradicate discrimination (some disadvantaged groups were not represented, or were not adequately represented), and because those who were represented were regarded as homogeneous groups (although, for example, each disabled employee requires individual consideration). At around the same time, researchers were also finding that culturally diverse teams were more creative than homogenous teams and contributed more effectively to meeting organisational goals. Thus there was a business case for diversity, although coping with it would be much harder than simply managing equal opportunities to meet legal requirements. 

Three separate commissions have been established, covering gender, race and disability discrimination, to promote equality and monitor their particular aspects of the legislation. Under the Equality Act 2006, a new Commission for Equality and Human Rights is to be established in 2007 to cover all equality issues, including the new age discrimination legislation being implemented from October 2006, as well as issues of human rights. 

Some statistics 

Unemployment is twice as high among people from ethnic minorities, although there are relatively more Chinese, Indian and Black African graduates than white graduates. Only 12 per cent of white men are in professional occupations, as opposed to 21 per cent of Chinese and Indian men. 

White men have the lowest rate of participation in full-time education between the ages of 16-24 (37 per cent), followed by white women (40 per cent). 41 per cent of white women in employment work part-time, but only 7 per cent of white men do so, as opposed to 38 per cent of Bangladeshi men. 

Black and Asian people are 2.5 times less likely to have jobs than whites. Ethnic minorities account for 8.1 per cent of the overall population. Because they are relatively younger, it is projected that ethnic minorities will account for half the growth in the working population to 2009. 

In the past ten years, the employment of the over-50s has risen by almost 25 per cent. The number of people aged over 60 is forecast to rise by 40 per cent in the next 30 years.

The social justice or equality case 

The social justice argument is based on the belief that everyone should have a right to equal access to employment and when employed should have equal pay and equal access to training and development, as well as being free of any direct or indirect discrimination and harassment or bullying. This can be described as the right to be treated fairly, and nowadays the law sets minimum standards in terms of pay, race, disability, gender, sexual orientation, harassment and bullying, and from October 2006, age. 

For more information on these topics, see our factsheets on: Age and employment, Disability and employment, Harassment at work, Race, religion and employment, Sex discrimination, sexual orientation, gender reassignment and employment. 

The business case 

Why should any employer want to push the boundaries set by the law? Equal opportunities is often seen as meaning treating everyone in exactly the same way. But to provide real equality of opportunity, people often need to be treated differently in ways that are fair and tailored to their needs. Arguably, the social justice and business case arguments for diversity are complementary, because unless people are treated fairly at work they will feel less than fully committed and will therefore under-perform. But diversity takes equality forward, and evidence indicates that organisations that are serious about diversity show better overall financial performance. 

There are three broad strands supporting the case for going beyond what is required by legislation and introducing diversity policies: people issues, market competitiveness, and corporate reputation. Organisations which follow them are also more likely to find it easier to comply with increasingly complex legal obligations, not least because diversity will be embedded in their cultures. 

People issues 

Research shows that people aspire to work for employers with good employment practices, and to feel valued at work. To be competitive, organisations need to derive the best contributions from everyone. Skill shortages and difficulties in filling vacancies are forcing more organisations to recruit from more diverse pools and to offer different employment packages and working arrangements. Creating an open and inclusive workplace culture in which everyone feels valued helps to recruit and retain good people.

• Employers who offer good working conditions benefit from more positive and committed employees, who are less likely to leave.
• Employees who are happier at work are less likely to suffer from stress or become sick, leading to fewer disruptions in production or service.
• Good employers will receive more applications for jobs, leading to a larger pool of talent to choose from.
• A diverse workforce will be more creative and innovative.

Diversity policies also help organisations to:

• Quality assure policies and working practices because diversity fits well with business excellence models and initiatives such as Investors in People and total quality management.
• Create an environment in which people from all backgrounds can work together harmoniously by combating prejudice, stereotyping, harassment and undignified and disrespectful behaviour.
• Bring about cultural change.
• Market competitiveness

A diverse workforce can help to inform the development of new or enhanced products or services, open up new market opportunities, improve market share and broaden an organisation’s customer base. Examples include:

• Financial institutions addressing the needs of ethnic-minority businesses.
• Local authorities seeking to improve the way they provide services to diverse groups within their communities.
• The Foreign Office recruiting from a wider pool so that embassy staff give a more accurate and balanced image of Britain.
• Supermarkets offering products to satisfy a wider range of eating preferences.
• Health services seeking to provide more choice for patients recognising their backgrounds and requirements.

Corporate reputation 

Healthy businesses flourish in healthy societies and the needs of people, communities and businesses are interrelated. Social exclusion and low economic activity rates limit business markets and their growth. Thus businesses need to consider corporate social responsibility (CSR) in the context of diversity. CSR is usually thought of as being linked to environmental issues, but an increasing number of employers take a wider view, seeing the overall image of an organisation as important in attracting and retaining both customers and employees. Indeed, it can be argued that CSR is part of the psychological contract between a firm and the community or communities in which it operates. CSR measures may include:

• Employing people who are representative of the local community.
• Seconding employees to charities.
• Supporting other initiatives designed to stimulate economies and employment, locally, nationally, or (in the case of multi-nationals) even globally.

Ethical behaviour is important too. Setting standards by means of value statements (and ensuring that they are adhered to) sends messages to present and potential customers, suppliers and employees. 

Leading-edge ‘dignity at work’ policies require that all forms of intimidating behaviour, including racial harassment and bullying, are regarded as contravening the values of an organisation and are treated as serious disciplinary matters. 

Managing diversity 

Managing diversity is about ensuring that all employees have the opportunity to maximise their potential and enhance their self-development and their contribution to the organisation. It recognises that people from different backgrounds can bring fresh ideas and perceptions, which can make the way work is done more efficient and make products and services better. Managing diversity successfully will help organisations to nurture creativity and innovation and thereby to tap hidden capacity for growth and improved competitiveness. 

But how to go about it? It is a complex task and every organisation will have to do it differently. The lead needs to come from the top. Unless the chief executive and board members are committed, change will not occur. It requires systematic management action, with a focus on the development of an open workplace culture in which everyone feels valued and can add value. It is a continuing process, and is at least partly about managing conflict, complexity and ambiguity. 

Ultimately organisations should aim to make managing diversity a mainstream issue, owned by everyone so that it influences all employment policies and working practices. 

Excellence in communications is central. People must be willing and able to talk to each other and listen to each other, and respect different views and ideas. 

Figure 1 suggests how organisations can move from where most are at present to a situation in which diversity enters the mainstream.�
Figure 1: Managing diversity – how to move equity forward�

Tips for action 

Although there is no single ‘right way’ to go about managing diversity, the following tips may help organisations considering diversity policies. 

Overall strategy

• Ensure that initiatives and policies have the support of the board and senior management.
• Remember that managing diversity is a continuous process of improvement, not a one-off initiative.
• Develop a diversity strategy to support the achievement of business goals, including ways of addressing the diverse needs of customers.
• Focus on fairness and inclusion, ensuring that merit, competence and potential are the basis for all decisions about recruitment and development.
• Keep up to date with the law and review policies through checks, audits and consultation.
• Address work-life balance challenges in ways that take account of employee and organisational needs and offer suitable choices and options.
• Encourage ownership and discourage risk aversion, aiming to create an empowering culture so that decisions are not passed upwards without good reason.
• Design guidelines for line managers to help them respond appropriately to diversity needs, as they are vital change agents, but give them scope for flexible decision-making.
• Link diversity management to other initiatives such as Investors in People and total quality management.
• Be aware that if your organisation operates internationally, its approach to managing diversity will need to take account of the ways that individual working styles and personal preferences are influenced by national cultures.

Workplace behaviour

• Introduce a value system based on respect and dignity for all.
• Aim to describe the desirable behaviours to gain positive commitment.
• Make clear that everyone has a personal responsibility to uphold the standards.
• Introduce mechanisms to deal with all forms of harassment, bullying and intimidating behaviour, making clear that such behaviour will not be tolerated and setting out the consequences of breaking the organisation’s behaviour code.

Communication

• Develop an open culture with good communication channels based on open dialogue and active listening.
• Use different and accessible methods such as newsletters, in-house magazines, noticeboards and intranets to keep people up to date with diversity policies and practices.
• Consult people for ideas.

Training

• Build diversity concepts and practices into management and other training and teambuilding programmes to increase awareness of the need to handle different views, perceptions and ideas in positive ways.
• Consider awareness-raising programmes about diversity and skills training to help people work together better in a diverse environment.
• Include diversity issues in induction programmes so that all new employees know about the organisation’s values and policies.
• Train line managers about diversity, aiming to help them understand the issues and drive them into organisational and operational policies and practices.
• Measure, review and reinforce
• Regularly audit, review and evaluate progress and keep qualitative data to chart progress and show business benefits.
• Use employee surveys to evaluate initiatives, to find out if policies are working for everyone, and to provide a platform for improvement.
• Track actions to see if they have had the intended results and make appropriate changes if necessary.
• Include diversity objectives in job descriptions and appraisals, and recognise and reward achievement.
• Benchmark good practice against other organisations and adopt and adapt relevant ideas where appropriate.
• Network with others from inside and outside your organisation to keep up to date and to share learning.
• Celebrate successes and identify learning opportunities from failures, to use them as building blocks for further progress.

CIPD viewpoint 

CIPD believes that recognising and valuing diversity is central to good people management practices. HR practitioners have an important role to play in creating inclusive workplaces where everyone can contribute to the success of the organisation. There is a compelling business case which should encourage organisations to look beyond legal compliance with anti-discrimination laws to a value-added approach enabling competitive benefits to be gained from developing good practice. Employers who sit on the sidelines regarding diversity will quickly become less attractive to existing and prospective employees. 

References 

WORMAN, D., BLAND, A. and CHASE, P. (2005) Managing diversity: people make the difference at work – but everyone is different. Guide. London: Chartered Institute of Personnel and Development. Available at: http://www.cipd.co.uk/guides CIPD has carried out annual surveys and various research on the psychological contract. 

Further reading 

Books

• CHARTERED INSTITUTE OF PERSONNEL AND DEVELOPMENT. (2006) Diversity in business: how much progress have employers made? First findings. Surevy report. London: CIPD. Available at: http://www.cipd/co.uk/surveys
• DANIELS, K. and MACDONALD, L.A.C. (2005) Equality, diversity and discrimination: a student text. London: Chartered Institute of Personnel and Development.
• MACDONALD, L.A.C. (2004) Equality, diversity and discrimination: how to comply with the law, promote best practice and achieve a diverse workforce. London: Chartered Institute of Personnel and Development.
• MULHOLLAND, G., OZBILGIN, M.F. and WORMAN, D. (2005) Managing diversity: linking theory and practice to business performance. Change agenda. London: Chartered Institute of Personnel and Development. Available at: http://www.cipd.co.uk/changeagendas
• PEARN KANDOLA. (2006) Managing diversity. 2nd ed. CIPD toolkit. London: Chartered Institute of Personnel and Development.
• TATLI, A., OZBILGIN, M.F. and WORMAN, D. (2006) Managing diversity: measuring success. Change agenda. London: Chartered Institute of Personnel and Development. Available at: http://www.cipd.co.uk/changeagendas
• THOMAS TAYLOR. W., PIASECKA, A. and WORMAN, D. (2005) Managing diversity: learning by doing. Change agenda. London: Chartered Institute of Personnel and Development. Available at: http://www.cipd.co.uk/changeagendas
• WORMAN, D. and WILLIAMS, P. (2005) Driving diversity progress: messages from a showcase of CIPD research. Change agenda. London: Chartered Institute of Personnel and Development. Available at: http://www.cipd.co.uk/changeagendas

Journal articles

• ALLEN, K. (2004) Implementing a diversity strategy. Equal Opportunities Review. No 126, February. pp13-19.
• ARKIN, A. (2005) Hidden talents. People Management. Vol 11, No 14, 14 July. pp26,28-30.
• THOMAS, D.A. (2004) Diversity as strategy. Harvard Business Review. Vol 82, No 9, September. pp98-108.
• Understanding the change process is key to diversity success. (2005) IDS Diversity at Work. No 13, July. pp7-11.

Source: CPID
Date: May 2006

This factsheet gives introductory guidance. It:

• introduces the forthcoming statutory regulation
• explains about employment practices which do not discriminate on the grounds of age
• sets out recommendations and an action plan for avoiding the use of age and age-related criteria in employment
• concentrates on discrimination against older workers
• includes the CIPD viewpoint.

What is age discrimination? 

Although there is no statutory definition of age discrimination as yet in the UK, age discrimination can be explained as occurring when someone treats a person less favourably because of that person’s age, and uses this as a basis for prejudice against and unfair treatment of that person. 

Age discrimination in employment can:

• affect anybody regardless of how old they are
• reduce employment prospects for older people, younger people and parents returning to work after a period of full-time childcare
• favour people in the age group 25 to 35
• prevent the full consideration of abilities, potential and experience of employees.

Our recent survey1 found that age discrimination remain a significant problem in the workplace with 59 per cent of respondents saying they have been disadvantaged because of their age. 

The legal position 

Age discrimination is the main area of discrimination which is protected in some other countries but which is currently not directly protected in the UK. This will change from 1 October 2006 when the government will introduce age discrimination legislation – the final version of the regulations was published on 9 March 20062. The October date is in advance of the December deadline set by the Equal Treatment Framework Directive (2000/78/EC) which requires the UK to implement national legislation preventing age discrimination. 

Age discrimination can take many forms. In legal terms, it will follow the same pattern as existing forms of discrimination law in the UK, namely direct and indirect discrimination, victimisation and harassment. CIPD members can find details of the new regulations and their legal implications for employers, including the transitional procedures for retirements, in our Age discrimination and retirement FAQ in the Employment Law at Work area of our website. 

Go to the Age discrimination and retirement FAQThe Age Partnership Group (APG), of which CIPD is a founder member, is funded and co-ordinated by the Department for Work and Pensions (DWP). It is comprised of organisations that represent the different needs of small, medium and large employers, as well as those who work directly with or provide information to employers and employees. APG has issued guidance3 which lists 10 key points about the new regulations: 

Age regulations are due to come into force on 1 October 2006. The regulations cover employment and vocational training. This includes access to help and guidance, recruitment, promotion, development, termination, perks and pay. The regulations cover people of all ages, both old and young. All employers, providers of vocational training, trade unions, professional associations, employer organisations and trustees, and managers of occupational pension schemes will have new obligations to consider. 

Goods, facilities and services are not included in the regulations. Upper age limits for unfair dismissal and redundancy will be removed. A national default retirement age of 65 will be introduced making compulsory retirement below age 65 unlawful (unless objectively justified). 

All employees will have the ‘right to request’ to work beyond the default retirement age of 65 or any other retirement age set by the company and all employers will have a ‘duty to consider’ requests from employees to work beyond 65. Occupational pensions are covered by the regulations, as are employer contributions to personal pensions. However, the regulations generally allow pension schemes to work as they do now. The regulations have more details. The regulations do not affect state pensions. 

In June 1999 the Government published a voluntary Code of Practice Age diversity in employment4 together with implementation guidance and case studies to show how a number of employers have tackled age discrimination. The Code sets out good practice principles to adopt in recruitment, selection, promotion, training and development, redundancy and retirement and reflects the advice given in this factsheet. There is growing evidence, through initiatives such as Age Positive, that UK employers are already taking voluntary action to regulate their own working practices. 

The business case 

It is estimated that age discrimination costs the economy between £19 and £31 billion a year in lost output. To be successful in an increasingly competitive market place, organisations need to attract and retain valuable employees and develop the talents of all their employees. 

Some key points:

• More people are living longer, active and healthier lives5.
• Evidence shows that differences in absenteeism between age groups are slight.
• Older workers stay in their jobs longer than younger people.
• Age discrimination leads to under-achievement, reduced self-confidence and motivation, lower self-esteem and loss of personal income and status.
• Findings from many studies show that younger and older workers are on average equally effective in their work.
• Research shows that, given the right training, older people are just as capable of learning new skills as younger people.

As life expectancy increases and the birth rate remains low, the proportion of the population aged over 65 will increase dramatically. Older people will become an ever more significant proportion of the population and society will increasingly depend upon the contribution they can make. In their publication Opportunity age: meeting the challenges of ageing in the 21st century6 the DWP gives details of the demographic shifts that are expected over the next few decades. The Government has stated that the best way to offset the impact of future changes in the age structure of society is to reduce levels of inactivity. Around 1 million people choose to work beyond state pension age already and the Government aspires to encourage a million older workers to do so, thereby maintaining the ratio of workers to non-workers in the economy at about the same in 2050 as it is now. Research information1 shows that there is a keen appetite amongst older employees for flexible working and flexible pensions and statistics indicate that activity levels for older female employees are expected to continue to rise. 

Recommendations for employers 

Employers need to prepare now for the new legislation by bringing all their policies and procedures into line with the new requirements, and seeking advice where necessary. Many employers have already taken action on age discrimination as a way of keeping ahead of their competitors and some companies, including B&Q, Asda, HBOS, Barclays Bank, GlaxoSmithKline and Nationwide, have adopted policies specifically to attract older workers. 

Age discrimination is a pervasive issue and the challenges of tackling it and ‘age proofing’ employment policies and practices are complex and take time. Each stage of the employment cycle should be examined as discrimination can occur throughout a person’s working life. All those involved in making decisions about the employment and training of people need to understand the implications of age-stereotyping. 

Recruitment and selection 

Age, age-related criteria or age ranges should not be used in advertisements other than to encourage applications from age groups which do not usually apply. Where this is the case, it should be clearly stated. 

It is desirable to state that age criteria will not be taken into account in employment decisions but used only for monitoring purposes. This information can be asked for in a ‘tear-off’ section of the application form and be kept separate from the application process. 

Interviewers and those concerned with selection must not be subjective on the basis of physical characteristics and unfounded assumptions, and must ensure their decisions are based on objective criteria, relevant to the job and merit. 

Medical advice 

An individual’s age should not be used to make judgments about their abilities or fitness. Where such a judgment is required, an occupational health or medical practitioner should be consulted. 

Reward 

Pay and terms of employment should not be based on age, but should reflect the value of individual contributions and standards of job performance. 

Training and development 

All employees should be eligible for training and development programmes as there is the potential to waste talent if particular age groups, eg those near retirement, are automatically excluded. 

Retention and redundancy 

When releasing employees, the organisation’s future needs for knowledge, skills and competencies should be taken into account – the ‘corporate memory’ needs protection. 

Alternatives to redundancy should be considered, such as shorter hours, part-time working, contractual arrangements, secondments and perhaps employment breaks. 

Retirement 

Alternatives to retirement may be considered, such as shorter hours, part-time working, contractual arrangements, secondments and perhaps employment breaks. 

Seventy per cent of 50-year olds stay on in work until state pension age. Research from CIPD1 indicates that many older workers would welcome an opportunity:

• for phased retirement for flexible working
• to work beyond the normal retirement age
• to work on a self-employed basis
• to work in the voluntary sector.

Organisations should also consider the advantages of using retirees as mentors to pass on experience and develop other employees through use of their knowledge and expertise. Our research shows that many organisations do this. 

An action plan 

Review 

Scrutinise all personnel policies, practices and procedures because age discrimination can:

• occur anywhere in the employment cycle from recruitment to redundancy
• be blatant or subtle, direct or indirect.

Policy

• Implement policy as part of an approach to diversity and equality.
• Use only objective criteria essential for satisfactory performance, and ensure these can be objectively justified.
• Communicate policy to all managers and employees, and offer training where necessary.

Stance and key actions

• Undertake an age audit.
• Do not rely on age, age guidelines and age-related criteria.
• Challenge the use of age and age-related criteria in every aspect of employment decision-making.
• Educate and train all staff about the implications of age discrimination.
• Use dates of birth only for monitoring purposes and administration. Give written assurances on this to gain the confidence and trust of job applicants and ensure staff making employment decisions follow this commitment.
• Monitor the age profile of the organisation at regular intervals to identify evidence of unfair discrimination against particular age groups.
• Consider ways of making sure that all age groups have access to development and promotion opportunities.

CIPD viewpoint 

CIPD is committed to the removal of age discrimination in employment because it is wasteful of talent and harmful to both individuals and organisations. The use of age, age bands and age-related criteria reduces objectivity in employment decision-making and increases the likelihood of inappropriate decisions. 

Employment decisions based on age are never justifiable because:

• age is not a genuine employment criterion
• age is a poor predictor of performance
• it is misleading to equate physical and mental ability with age
• when age is used, it tends to be a proxy for underlying factors, such as health or ability to drive, for example.

The efficient and effective use of people’s skills requires that employment decisions should be based on competencies, qualifications, skills, potential and objective job-related criteria obtained through careful analysis of job requirements and job performance. 

CIPD believes there is an important business case for employers to take action to remove age discrimination and has undertaken research and published guidance to raise awareness and educate personnel practitioners and employers about the issues involved. Organisations need to understand this business case and appreciate how competitive benefits can be gained from developing good practice. This will motivate them to implement progressive change and interpret the impending legal duties in positive ways which go beyond a minimum approach to compliance. 

Although CIPD recognises that the law can help to effect change in employment practice, self-regulation based on increased understanding is favoured as the best way to encourage employers to deal with age discrimination. 

References

• CHARTERED INSTITUTE OF PERSONNEL AND DEVELOPMENT and CHARTERED MANAGEMENT INSTITUTE. (2005) Tackling age discrimination at work: creating a new age for all. London: CIPD. Available at: http://www.cipd.co.uk/surveys Equality and diversity: age discrimination in employment and vocational training [online]. (2006) London: Department of Trade and Industry. Available at: http://www.dti.gov.uk/employment/discrimination/age-discrimination/index.html
• AGE PARTNERSHIP GROUP. 20 key facts your business needs to know. London: Department for Work and Pensions. Available at: http://www.agepositive.gov.uk/newsDetail.cfm?sectionid=44&newsid=590
• DEPARTMENT FOR EDUCATION AND EMPLOYMENT. (1999) Age diversity in employment and Age diversity in employment: guidance and case studies. Code of practice. Nottingham: Department for Education and Employment. Current version available at http://www.agepositive.gov.uk/
• SEAGER, A. (2006) Government statistician counts on us living and working longer. The Guardian. 13 January. Available at http://business.guardian.co.uk/story/0,16781,1685360,00.html
• DEPARTMENT FOR WORK AND PENSIONS. (2005) Opportunity age: meeting the challenges of ageing in the 21st century. London: DWP. Available at: http://www.dwp.gov.uk/opportunity_age/

Further reading 

Journal articles

• SMETHURST, S. (2006) State of mind. People Management. Vol 12, No 1, 12 January. pp.24-29.
• SUFF, R. (2004) Using age-diversity policies to attract and retain older workers. IRS Employment Review. No 808, 24 September. pp42-48.
• VICKERSTAFF, S. (2005) Managing the older workforce. Equal Opportunities Review. No 137, January. pp6-10.