New rules spell end to workplace benefits

LONDON, Sep 30 (Reuters) New age discrimination legislation could spell an end to workplace benefits, a leading think-tank warned.

The Employer's Forum on Age (EFA) voiced concerns that the Employment Equality (Age) Regulations coming into effect tomorrow will threaten the provision of a range of insured employee benefits.

They include group income protection, disability insurance, critical illness cover, life insurance and private medical insurance.

Unlike occupational pension schemes, these do not come under an array of exemptions built into the regulations.

The EFA has submitted its concerns to the Department for Trade and Industry in a paper prepared jointly with the Association of British Insurers and Group Risk Development.

Sam Mercer, director of the EFA, said the new rules were forcing employers to re-think their approach to benefits much valued by employees.

''The age regulations as they currently stand,'' she said, ''fail to recognise the increased costs employers face in providing insured benefits, the availability of specific benefits to employees over 70 and the risk employers face in seeking to objectively justify the provision of different benefits to employees at different ages -- which is current employer practice.'' The EFA fears the regulations could lead to employee benefits being scrapped for all employees, irrespective of age.

''Employers are not at all convinced that they will be able to objectively justify the age discrimination necessary to continue to offer these benefits, especially where cost is the main reason,'' said Mercer.

''This has serious ramifications: if employers fail to provide many of these benefits, then the burden of providing for employees when they are unable to work and fall sick will fall on to the state.'' She said it was ''critical'' that the government urgently amended the new rules to add further exceptions relating to insurance, in particular the fixing of an upper age limit for cover.

''This could be directly linked to the default retirement age of 65, and could, if necessary, increase over time,'' said Mercer.

REUTERS MQA PM0939