Age Discrimination Act — Giving employees the right to carry on working for ever will have a devastating impact on the development of businesses, as older workers hinder the succession of younger talent to the top
Hope I die before I get old were the immortal mutterings of Pete Townshend in the iconic song My Generation. Watching the windmill-like gyrations of his guitar arm at the recent Who reunion gig last month in Leeds I am sure that these words have come back to haunt him now that his plectrum may well be replaced by a bus pass. I also think that Gordon Brown may live to regret the ill-conceived legislation with which we are now saddled, known as the ultimate in political correctness, The Age Discrimination Act.
It wasn’t that long ago that many people were bent on retiring at about 55 and certainly at 60. Now everyone is to have the right to carry on working for ever. For consultancies with long-established partner agreements this new legislation could have a dramatic effect on recruitment as well as on business development strategy.
Under the new legislation, the retirement date will be removed from any equity partners’ partnership deed. The contract, which is an agreement to work together until a fixed point in the future, is completely overridden by the new laws. To seek clarification, I asked employment lawyers how the existing agreement can be overridden when the agreement was originally based on a common decision by both parties to retire at a certain age, if not before. I liken it to signing a contract to Charter a boat for a week and then one party deciding that because of a change in the law they can now keep the yacht forever.
Surely “partners” by common consent are self-employed and as a result have deliberately swapped employee rights to a set retirement age for the benefits attained by self-employment status. This concept has apparently now been jettisoned by the new legislation. This doesn’t only apply to equity partners. From now on directors and employees who were to retire at 60 can now retire at 65 and soon 70. This will have a devastating effect on the way that a business is structured, the potential progress of those contributing to its development and more importantly its succession planning. To keep any organisation vibrant you need new blood coming in and hopefully fighting its way to the top. That top has now had a very heavy 10-year lid stuck on it courtesy of politicians, who don’t have fixed retirement dates themselves and can move on to myriad private consultancies. They also receive very generous pension allowances.
It’s a bit like Steve McClaren having to play with the last England squad for the next 25 years …
Our industry suffers from a shortage of people in the 35-40 age bracket because of the recession at the end of the 1980s. The few who have stuck with the market are now being told that their future progression is being hampered because the people at the top are not moving on. I have been advised by a top lawyer that firms like our own could be sued, not only by older people not wishing to retire but also by younger people who feel they are being discriminated against in their progress because of their (young) age.
Some cultures venerate the elderly. The Chinese put great store by the wisdom brought with years and, with more than 200 million people due to reach 60 by 2025, they have a great potential pool of knowledge upon which to draw. Experience is important but the time comes when age brings an inevitable slowdown and surely they should not be entitled to the same benefits they enjoyed when they were fully active.
The general rule of 60 or 65 years as being the age at which you can put your feet up has now been removed with no consideration for the business environment. It is a fact that a Main Board of Octogenarians will not have the same dynamic qualities as a team in their 40s or 50s. It’s a bit like Steve McClaren having to play with the last England squad for the next 25 years – although Theo Walcott might be okay …
I suspect we will see a compromise reached at the end of the day. Until case law exposes the true nature of this sledgehammer legislation, those with smaller pensions pots than they would like now have the leverage to demand more money from employers. Many will be paid to exit the business to simply keep the firm moving ahead. But there is not a bottomless pit in our margin-conscious sector, so the money spent on retirements will have to be saved in the other areas such as training and development, the knock-on effect being that younger people will be less well equipped to do the jobs in which they will need to work for even longer.