Employment Law : “When I get older, losing my hair, many years from now…”

The Beatles’ song When I’m 64 nicely captures many people’s fears about the ageing process, although not surprisingly, didn’t touch on employment issues. Angst about age-related employment issues is on the rise, however, which is no doubt linked to the fact that New Zealanders are staying in paid work for longer. The number of over 65s participating in the labour market was around six percent in 1991 and is projected to increase to around 20 percent by 2016. Employers need to respond by maximising the potential of an ageing workforce, especially in labour market short of skilled workers. However, employers may also find themselves facing challenges, particularly where they consider an older employee’s performance has started to decline.

Performance management
In the perception of some employers, performance issues with older employees are often linked to gradual decline in enthusiasm and performance as some employees approach and pass the “normal” retirement age. However, sometimes an employer’s perceptions of deteriorating performance are exactly that – perceptions.
Thirty-one percent of respondents to 2006 EEO Trust survey reported experiencing some form of age discrimination at work. Older respondents complained of being targeted for redundancy due to their age. This is not to suggest that discrimination does not affect younger workers, but as employees stay in the workplace for longer, the issue will increasingly relate to older staff.
Performance concerns in relation to older staff should be managed in the same way as for other employees. Provided this is done fairly and with sensitivity, there is no reason to fear an age-discrimination claim.
The requirements of employers in terms of managing and if necessary disciplining and dismissing poor performers are well established. In summary, it is essential to set clear standards and monitor performance against these, providing feedback and assistance where needed.
If the employee’s performance does not improve, formal action can then be taken. This can include warning(s) – following proper disciplinary process – and down the track, dismissal.

Retirement/demotion
Compulsory retirement in New Zealand amounts to age discrimination, as well as unjustified dismissal, and is therefore unlawful (subject to certain rules relating to employment relationships existing prior to 1 April 1992).
It is also unlawful to subject an employee to detriment by reason of prohibited ground of discrimination, including age. The Court of Appeal recently considered this issue in Air New Zealand v McAlister. McAlister was employed as flight instructor which required him to maintain his Pilot in Command (PIC) status. However, he was affected by an international standard providing that pilots cannot be PIC on international flights once they attain 60 years of age. The number of countries subscribing to this standard meant that McAlister was effectively unable to maintain his PIC status upon reaching age 60. Accordingly, under Air New Zealand’s policy, he lost his flight instructor position.
The Court of Appeal was required to determine whether McAlister had been discriminated against. It ruled that his treatment should be compared against that which would be afforded to another (hypothetical) pilot who was unable to fly certain routes for different reason, for example lack of the necessary visa.
This contrasted with the Employment Court’s approach where the comparison group was simply pilots under 60 (who were obviously treated more favourably than McAlister on account of their age, leading to the finding that McAlister had been discriminated against).
The Court of Appeal said that if Air New Zealand’s treatment of the hypothetical pilot who was unable to fly certain routes for different reason would be the same as McAlister’s treatment, then Air New Zealand had not discriminated against McAlister by reason of his age. The Court concluded that the Employment Court had adopted the wrong comparison group, and in doing so, its conclusion of discrimination was wrong.
The decision of which comparison group to choose is often controversial in discrimination cases, as it tends to have substantial impact on the outcome. In deciding this issue, the Court referred to decisions of the English and Australian courts. While decided under different legislation, these cases emphasised the importance of placing the comparator in the same circumstances as the complainant. In this case, that meant McAlister’s flight restrictions created by the international standard were relevant. In other words, the comparison group would also have flight restrictions (although for different reasons).
While our legislation (and overseas case law) appears to support this approach, the Court’s decision effectively allows potentially discriminatory international standard to triumph, namely the age-related “flight restrictions”.
Having said that, it is difficult to see what else Air New Zealand could have done, and the Court’s ruling will be welcomed by employers generally.

Greg Cain is partner with law firm Minter Ellison Rudd Watts. Nick Belton is solicitor with the firm.

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