Many SMEs are unprepared for the age discrimination regulations, which come into force on 1 October, insurance experts have warned.
The regulations are being introduced as a result of a European Directive, and complete the so-called six-pack of UK discrimination legislation. It will be unlawful for employers to discriminate on grounds of sex, race, disability, sexual orientation, religion or belief and age.
They cover employment and vocational training, including access to help and guidance, recruitment, promotion, development, termination, perks and pay.
John Heaney, UK commercial underwriting manager at Hiscox, said the new regulations were set to have a massive impact.
"Too often SMEs are just relying on a standard office policy. They don't realise that currently they are more likely to sued by an employee than have a fire and this new law leaves them even more exposed."
He said clients were better protected with specialist employment practices liability cover, which covered any fines sustained as a result of litigation, rather than the purchase of a legal expenses policy.
Phil Ruse, senior manager for Allianz Cornhill Legal Protection, said: "This legislation will affect the whole of the working population of around 27 million.
"Turning someone down for a job because they appear too old or indeed too young could spark costly litigation. We can expect to see a rise in applications to employment tribunals and greater demand for advice."
The compensation awarded as a result of the new regulations is uncapped.
