Many companies could be heading for embarrassing and expensive legal action because of widespread ignorance of forthcoming age discrimination laws. In the US, where such legislation has been in force for some time, cases involving age discrimination are increasing at a faster rate than any other form of claim. To prepare your business for the new laws you should review the following guidance.

In the UK, as in the rest of Europe, the age profile of the nation is changing drastically, with 36% of the labour force aged 45 or over by 2005. By 2015 almost 40% will be in that age group, while 16-24 year olds will make up 17% of the labour force. The current system cannot cope with this ageing population and recent government proposals have highlighted the need to raise the age of entitlement to pensions and encourage older people to stay in the workplace for longer. New legislation is coming into force in October 2006, which aims to stop so-called ageism in the workplace.

The new Employment Equality (Age) Regulations 2006 will:

• Ban age discrimination in terms of recruitment, promotion and training
• Ban unjustified retirement ages of below 65
• Remove the current age limit for unfair dismissal and redundancy rights

Some employers have a system of mandatory retirement for their employees. Employers will now only be able to retire an employee below 65 where they can show that it is appropriate and necessary to do so. Employers will need a fair reason (e.g. performance) to dismiss an employee, whatever his or her age. The test for justification will be very stringent and if employers are determined to retain mandatory retirement, they will need to start preparing their defence, as it will inevitably be disputed. All employees will have the right to request to work beyond the age of 65 or any other retirement age set by the company and all employers will have to give due consideration to these requests from employees.

Jokes about age are often seen as part of the camaraderie of the office. For example, it is not uncommon for a 40 or 50 year old employee to be the butt of many jokes on their birthday. Younger employees might also find themselves subjected to this kind of treatment. These exchanges can no longer be seen as harmless under the new legislation; they are now regarded in the same bracket as jokes about race, sex or disability. Derogatory comments such as age-related remarks and unjustifiable dismissal of suggestions on the grounds of the age of the person will fall foul of age discrimination laws. Be aware of this ahead of time and try to revise your working practices accordingly.

The major area that will be affected is recruitment, particularly when advertising a vacancy. Your employment procedures should be fully reviewed immediately for terms that may be in violation of the new legislation. An example of this would be age limits in recruitment or asking a job applicant their date of birth. These will only be lawful if there is a genuine occupational requirement (this is very hard to prove) or it is objectively justified.

To make things more difficult, employment tribunals may be prepared to draw inferences of age discrimination. Adjectives in recruitment advertisements such as "senior", "dynamic", "mature", "young" or "energetic" should only be used with caution. Requirements such as experience can also indirectly discriminate since they disproportionately favour certain age groups. Adverts should be placed so as to reach as wide an age range as possible. We suggest you read through the recruitment section in our lawguide to ensure compliance.

The current government restrictions on Statutory Sick Pay (SSP) mean that only employees aged 16 or over and below the age of 65 years are entitled to receive SSP. From 1st October 2006, new government legislation will remove these age restrictions to allow SSP to be paid to all employees, as long as they meet all other qualifying conditions.

Contrary to some reports, there appears to be little threat to the existing minimum wage system. Employers will be able to follow the age bands and minimum wage levels used in the National Minimum Wage legislation. Nothing in the regulations will alter the provisions of the National Minimum Wage. The exemption linked to the National Minimum Wage will allow employers using exactly the same age bands, i.e. 16 and 17, 18 to 21 and 22 and over, to pay at or above the national minimum rates provided those in the lower age group(s) are paid less than the adult minimum wage. Whilst this is open to legal challenge, the government has a viable defence on the grounds that the different rates of minimum wage for under-21s are in place to encourage more younger people to stay on in education rather than find a job and therefore not discriminatory.

The impact the new laws will have on small businesses is on a par with the legislation on gender. Be mindful of your liabilities and take steps to banish ageism from your workplace.