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Employment Today, HR Solutions - Thomson Reuters

Employment Today, HR Solutions - Thomson Reuters

Employment Today Magazine

Just a number?

When does age get to be a problem in the workplace? Bridget Smith discusses the challenge of balancing loyalty to long-serving staff with ensuring the organisation’s needs are still being met.

The radio station I listen to when I drive to work in the morning used to play a song/advertisement with words along the following lines: “I’m going to work till I die, I’m going to work till I die. Working 9 to 5, I’m going to work for life, I’m going to work till I die”. One version I recall listening to was about a dentist with shaky hands, another was about being in middle management aged 83.

As an employment lawyer, a song with the words “I’m going to work till I die” piqued my interest. This was compounded by the fact that it clearly wasn’t an actual song, but there was nothing in the lyrics that identified who it was for or what it was advertising.

Eventually, I found out what the song was about—it was an advertisement for KiwiSaver. The message was that if you start saving for your retirement, you may not be in a situation where you have to keep working. You don’t, in fact, have to work for life. Adequate savings may give you the freedom to resign when you want to stop working and not feel like you have to keep working.

But the song itself raises an interesting issue—does an employee have a right to work till they die? In practical terms, an employee who has worked for an organisation for an extended period may expect their loyal long service to be rewarded by an ability to work until they decide not to. However, as roles change over time, particularly to meet new demands, including technological demands, the concept of a “job for life” no longer exists in many organisations.

The challenge for many organisations is therefore balancing the concept of loyalty to long serving staff, while ensuring that the organisation’s needs are still being met.


Starting with the law, once an employee commences employment, that employment can only be terminated by agreement or in accordance with s103A of the Employment Relations Act 2000—that is, the decision (to terminate the employee’s employment) is a decision that a fair and reasonable employer could have made, in all the circumstances at the time. Perhaps the easiest way to summarise the obligation is that the employee’s employment can only be terminated for cause, and where the employer has followed a lawful and fair process.

Consider this situation (one facing many companies). An employee has worked for a company for an extended period of time and received incremental pay increases during their employment. While that employee may still be doing an acceptable job, there comes a time when the employer considers that they could hire someone else to do the same job for less money.

As we continue to move out of a recession we’re still in an economic situation where there are more jobseekers than roles and plenty of keen recent university graduates who are ambitious and hard-working and looking for any step upon which to start their climb up the corporate ladder. Those potential employees are likely to be, amongst other things, keen, motivated, hard working, ambitious, up to date on new technology, and eager to please. They’re also generally willing to work for less than established employees, instead focused on getting a start in their careers.

Culturally, you can begin to see how this can create an issue. Provided the existing employee is doing an adequate job, there are no apparent legal grounds to terminate their employment if the company still requires the role. But at the same time, a savvy, commercially focused employer will recognise the opportunity to recruit what might accurately be described as a newer, more up-to-date (and conveniently cheaper) model.

While the potential cost savings, and the attraction of an employee who is up to date on new technology may have its appeal, the long-serving employee/model still has its benefits. Yes it may cost more, but that cost should recognise the value of experience, and in many cases loyalty to the company, built up over many years. Sometimes it really is true—you get what you pay for.

So as an employer, what do you do when there comes a time when you realise you could get someone else to do the same job, probably faster, and definitely cheaper? And what do you do if the long-serving employee’s performance starts to decline? Do you really want to performance manage an employee who has been with the company for some 30+ years?

Let’s say you have an employee who has worked for you for 30+ years and appears to be intending to work until retirement at aged 65, but that is still 18 months off and his/her performance isn’t what it used to be. Many employers won’t relish the prospect of a performance discussion with such a long-serving employee, but at the same time, there is an economic and commercial reality that must be faced.

The onus is on the employer to deal with any issues proactively. If there are issues with the employee’s performance, manage those as performance issues. If the employee’s role has developed and changed to the extent that the original role is no longer required, a restructuring process may be required. The key point is that the onus is on the employer to deal with the issues, rather than simply hoping that an employee might “take the hint” and decide to leave. In fact, employing a wait-and-hope strategy is inherently risky.

Most organisations don’t want to be seen to be “getting rid of”long-serving and loyal employees; not least of all because of the risk of a claim for discrimination based on age. Accordingly, even if performance becomes an issue, there is frequently a genuine desire to manage an exit in the best interests of both parties.

To come back to the fundamental principles of employment law, both parties have an obligation to deal with each other in good faith—which requires the parties to be open and communicative. Discussions about both parties’ requirements and intentions in a frank and fair manner will go a long way to ensure that the needs of both are met.

Transitional roles where a long-serving employee gradually moves from full-time to part-time, or has the opportunity to train or mentor a younger staff member as part of a hand-over of responsibility, can go a long way to preserving both reputation and good will. Such arrangements also have benefits in terms of ensuring that valuable knowledge is passed on within an organisation.

The latest KiwiSaver advertisement is a clear example that this scenario it not just a hypothetical. It is becoming a common issue for New Zealand employers as New Zealand’s population ages. While I wouldn’t necessarily rush out and buy the CD, the words of the song “I’m going to work till I die” have stayed with me. They are, if nothing else, a timely reminder that the ageing population is something the New Zealand business community needs to consider.

There is no right or wrong answer, but as a business it is worth assessing how your company wants to be known. Do you want to be a breeding ground for young talent or do you want a stable of long-serving and experienced staff? The business model for each will inevitably be different.

BRIDGET SMITH is a partner with Swarbrick Beck Mackinnon.

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