THE WEIRD thing about Lord Browne's spat with BP chairman Peter Sutherland over his retirement is that it may be unreal. BP wants Browne to retire in 2008, when he is 60. But from October, the Employment Equality (Age) Regulations make compulsory retirement under 65 illegal. Browne may be perfectly within his rights in three years to say he has changed his mind and won't be going after all.
Employment lawyers say that forcing early retirement will constitute discrimination only justifiable in exceptional cases - hardly applicable to Browne, whom most shareholders would love to stay. The only other option will be a pay-off. In the past, the highest compensation for unfair dismissal - the sole legal remedy in such cases - was pounds 58,000, but under the new regulations payouts for age discrimination have no upper limit.
According to a survey by human resources specialists Adecco and Tarlo Lyons, just 13 per cent of HR managers in large UK firms are concerned with the impending rule change. But the legal profession warns the changes are likely to put a slow burn under the whole employment relationship, including pay and seniority as well as retirement.
Andrew Chamberlain, an employment solicitor at law firm Addleshaw Goddard, says: 'Unfortunately, the legislation isn't very well drafted, which means that in some areas we can't give clear advice, so employers will keep their heads down until they can see what it means. It will probably take a lot of expensive litigation to establish what the intentions are.'
The Observer, 6 August 2006
Even before then, it is clear that payouts will be more frequent and higher. Take a 59- or 60-year-old middle-to-senior manager whom an employer wants to push aside in favour of a more energetic 40-year-old. Under present rules, with a small payoff such borderline terminations are hard to resist. When age becomes a legal factor, expect a rash of discrimination cases.
For a foretaste, look at recent high-profile sex-discrimination cases in the City. Sex discrimination was outlawed in the 1970s, but when upper limits on compensation claims were lifted, cases soared. Taking into account loss of earnings and bonuses, payouts can hit pounds 800,000 or more. High earners kicked out for failing to gee up corporate performance will also have another argument for compensation, potentially leading to higher 'payments for failure'. Chamberlain predicts: 'Companies will have to approach senior executive terminations much more rigorously - or expensively.'
Some traditional forms of pay will also be brought into the age discrimination net. Professional firms (including solicitors) will have to justify pay based on levels of qualification, since this indirectly favours older workers over younger ones. And though seniority increments are exempted from the regulations for up to five years, after that they too will have to be justified, on grounds of both 'legitimate aim' - business or welfare case - and being 'proportionate' - discriminatory effects should be outweighed by benefits, and there should be no less discriminatory way of achieving the same end. This could affect civil servants and other public-sector employees, possibly speeding up the move to individual performance contracts.
One of the oddest, unintended, consequences of the new regulations may be the emasculation or even disappearance of the CV. Employers are already advised not to ask for date of birth on job applications. However, education and employment dates could convey the same information. Acas suggests removing requests for 'unnecessary' date and period details from forms, but employers claim that would make them meaningless. What is and isn't justifiable is another aspect of the regulations that may have to be tested in the courts.
All right-on nonsense? There's far too much legislation in employment already, grumbles Chamberlain, who queries the consequences of enacting poorly drafted regulation before business, and society, is ready. For others, that's the justification. After all, tossing perfectly good employees on the scrapheap at 60 serves neither their nor society's interests.
With nice irony, one of the most spirited attacks on 'the bureaucratisation of age, which ignores ability and choice and creates a linear process driven solely by the ticking of the clock', comes from the BP website. When so many jobs depend on know-how accumulated over time, 'How can we afford to neglect such experience?' it demands. 'How can we afford to say to someone - just because they have reached the age of 60 or 65 - "You are too old to make a contribution"? How can we afford to have to learn everything again and again, simply because of chronology?'
How indeed? The author: John Browne.