NEXT WEEK John Harvey will celebrate 10 years of working for Sainsbury’s. That in itself seems unremarkable — but Harvey is 87 years old.
A railwayman for 43 years, Harvey came out of retirement to join the growing band of “grey” workers given a second wind in the workplace by high-profile retailers such as J Sainsbury, Asda, B&Q and Tesco.
Sweeping changes will soon mean that Harvey’s growing band could be merely the forerunners of a new army of elderly workers. From October 1 it will be illegal for employers to force workers to retire early.
“I think people should be judged on whether they can do a job, not on their age,” said Harvey in the Islington, north London, store where he stacks shelves. “It has been wonderful and keeps me active.
“The older customers like the fact that I am older. I have done a lot for customers. I take the people round who come in wheelchairs, things like that.”
The company policy that enabled Harvey to return to work at the age of 77 was entirely voluntary. But when the new age-discrimination laws come into force, employers will have a duty to consider employees’ requests to work beyond the retirement age. The upper age limit for unfair dismissal and redundancy rights will also be scrapped. And there are to be curbs on staff promotions linked to length of service.
The reforms amount to the biggest single change to employment practices in Britain for 30 years and will outlaw all forms of direct and indirect age discrimination.
But tens of thousands of companies run the risk of falling foul of the rules, making them vulnerable to huge legal claims.
Recruitment could become a minefield because job advertisements that use any age-related terms are likely to fall foul of the law. It will also be illegal to make ageist comments in the workplace.
“The ramifications are huge,” said Mike Huss at Peninsula Business Services, Britain’s largest employment law firm. “You cannot say that someone is ‘wet behind the ears’ or that they have been ‘round the block too many times’. An ageist comment made by anyone in a company leaves employers vulnerable to damages claims,” he said.
The result is that many employers will be forced to rethink fundamentally how they hire and fire and how they reward staff — from basic pay to bonuses, and company cars to pension plans. Punishments will be severe. If companies are found guilty of discriminating over age, they face having to pay unlimited compensation. In contrast, awards for unfair dismissal are capped at £56,800.
“It is no exaggeration to say that this is the most radical change since the sex and race discrimination laws of the 1970s. It will affect every employer and every employee from the boardroom to the shop floor,” said Huss.
The importance the government attaches to this was underlined by last Friday’s announcement that the racial-equality chief Trevor Phillips has been appointed as chairman of the Commission for Equalities and Human Rights, which merges authorities on disability, race and equal opportunities and will enforce legislation on age, sexual orientation and religion.
When similar ageism laws were introduced in Ireland in 1998 and America in 1967, court cases rocketed by 19% and 40% respectively.
One of the most sensitive areas is recruitment, since the law applies to both young and old. The traditional “milk round” or jobs fairs at universities could be challenged on discrimination grounds.
At the same time, companies running graduate recruitment schemes could have to reconsider whether they impose an age limit. Job ads using age- related words such as “mature” or “young” could also land companies in hot water.
In a celebrated case five years ago, Ryanair was ordered to pay the Irish Equality Authority £8,000. The airline, run by the outspoken Michael O’Leary, got into trouble over a job advertisement seeking “young, dynamic professionals”. Although Ryanair argued that “young” could be interpreted to mean “young at heart”, it lost the case.
And there have even been suggestions by lawyers that some out-of-work older people could use “ambulance chasing” tactics, making applications with the aim of launching a legal action after they were turned down.
Certainly, many smaller businesses believe the rules will create confusion and red tape. Others are angry at what they see as impractical restrictions.
“It is a sad fact that we all get old, but that should not mean undue sympathy,” said Trevor Honeyman, managing director of Kensington Windows & Conservatories, a Darlington producer of UPVC windows.
“There have to be horses for courses. I think as an employer we should be able to take a view that a guy of 20 can do a job that a man of 58 cannot. It is political correctness without looking at the implications for the ordinary business.”
However, the new laws come at a time when older people — like John Harvey — are taking more of the new jobs being created in Britain. According to figures from the Office for National Statistics, more than half the jobs created in the 12 months to April this year were filled by people above the state pension age.
An increasing number of staff employed by the supermarket giants are older than 50, a result of the retailers making a concerted attempt to reflect better the balance of society and the profile of their customers.
Other controversial areas include incentive payments and perks. Sabbaticals and extra holidays awarded for long service — a policy that is thought to be used by half of all British companies — are expected to become illegal. There is also concern that the rules could hit the large number of pension schemes where employers pay higher contributions for older workers.
Critics such as Huss claim the law has been rushed through, creating problems. For example, it forces firms to give six months’ notice of an individual’s retirement date, a crucial measure designed to ensure “retirement” is not used as cover for unfairly sacking staff.
However, this has created confusion for people who are retiring before April since there is not sufficient time to give notice. As a result, messy transition rules have been added, but experts say these could leave employers open to breach-of-contract claims.
Much of the focus has been on the treatment of older workers approaching retirement. However, some believe that the City — where many banks and brokers encourage a youthful, dynamic culture — could be particularly vulnerable. A trader who has “burnt out” by his late thirties and is then shifted sideways could potentially mount an age-discrimination claim.
Some legal experts argue there could also be huge ramifications for executive pay as ousted chief executives try to sue their companies by turning to the new laws and unlimited compensation awards that will be on offer.
Michael Leftley, of the leading law firm Addleshaw Goddard, said: “When a chief executive is booted out, he often has a case for unfair dismissal, but the £56,800 on offer has made a claim irrelevant. Now we could see a situation where a chief executive is asked to step down by the board because there is need for new blood. If the chief executive is in his late fifties and his successor is much younger there would be a clear basis for an age-discrimination claim.”
Leftley argues that the threat of legal action could lead to ousted executives being awarded much higher pay-offs than the typical one year’s salary.
Such a move is likely to anger shareholders and reignite the debate about executives being rewarded for failure. Investors remain highly sensitive to excessive pay-offs. Earlier this year investors reacted angrily when Ian Russell, the ousted chief executive of Scottish Power, received a £5m package including a £2.7m top-up to his pension.
What is worrying is that six months after the laws were first outlined, many companies appear woefully ill-prepared.
A survey by Peninsula, which is due to be released next week, shows that 86% of employers have yet to revise their human-resources policies to take in the changes, and
76% believe the regulations are too complicated and should be simplified.
Meanwhile, some 54% think that employing people over 65 would cause additional problems because of health issues and 78% did not believe older workers would benefit their business.
While nobody would question the aims of stamping out ageism, there are grave concerns that small firms are just not geared up to handle the changes.
“Most small businesses are likely to fall foul of the new laws from ignorance rather than intent,” said Matthew Knowles at the Federation of Small Businesses, which represents 195,000 UK firms. “We hope we will see a period of common sense and that there will not be an overreaction if mistakes are made.”
The changes in the law will not, however, be immediately affecting John Harvey, who is looking forward to another Christmas with Sainsbury’s. And that’s because it brings an extra job — as the store’s Father Christmas.
