A Solihull recruitment agency is warning companies that they will have to make radical changes to their policies on age in the next 12 months or face huge payouts at industrial tribunals.
In October 2006 a series of employment law changes are due to come into effect which will mean employers will no longer be able to recruit, train, promote or retire people on the basis of age unless it can be objectively justified.
Ashfield Personnel is already working with its clients to help them adapt to the legislation which aims to prevent age discrimination in the workplace.
Research has shown that people over 50 are placed as the third most disadvantaged group in the workplace after those with learning difficulties and those with physical disabilities.
Sue Yates, managing director of Ashfield Personnel and senior vice-president of Solihull Chamber of Commerce, said: "Preparation for the new ageism legislation in 2006 is essential. Attitudes and mind sets of companies and individuals have to be changed to provide them with the workforce of the future.
"With an ageing population in the UK, discriminating against workers on the grounds of age means employers may be missing out on the talents of the one million economically inactive older people who could contribute an additional £30 billion to the annual economic output.
"We are talking to our corporate clients and alerting them to the changes they may have to make to avoid employment tribunals at a later date."
The "anti-ageism" measures, announced in 2003, will bring Britain into line with European directives and make it unlawful to advertise jobs as being open only to "young, energetic people". Also outlawed will be unjustified discrimination on the grounds of age in promotion and training opportunities, as well as the provision of health and pension benefits. Workers aged over 65 will be able to claim unfair dismissal or demand full redundancy.
Recent research has shown that up to two thirds of firms are considering raising the age for pension entitlements amid the continuing crisis over funding final salary schemes.
Although the proportion of 50-year-old people staying on at work until state pension age has risen from 65 to 70 per cent since 1998, ministers believe much more needs to be done to prevent the talents of Britain's "grey generation" being wasted.
By 2010, it is predicted that more than 40 per cent of the British workforce will be over 45, and only 17 per cent will be under 24. Many firms, especially retailers such as Asda and B&Q, have adopted hiring policies designed to attract older workers. Age discrimination currently costs the economy £16 billion a year by reducing the size of the labour market.
But the Employers' Forum on Age campaign group has warned that the laws could cost £200 million to implement. The estimate was calculated on the basis of experience in America, where firms had to pay out huge sums after the introduction of anti discrimination laws.
In contrast to race or sex discrimination cases, older workers often claim they will not get another job and seek compensation for ten or even 20 years' lost earnings.