BP is a multinational oil and gas company headquartered in London and one of the seven biggest oil companies in the world. They have operations in seventy-two countries and employ over seventy-four thousand people and produce 3.3 million barrels of oil equivalent per day. The company’s financial success makes it the sixth-largest energy company by market capitalization and the world’s twentieth biggest company based on revenue. The company operates in the oil and gas industry in the exploration, refinery, and production of oil and gas, in the distribution and marketing of gas and oil products and also in petrochemicals, power generation, and trading. Despite their massive profitability the company is faced with many lack of compensation and benefits claims from both it's retired and long-term employees a fact that negatively affects its brand equity and corporate image. The company is faced by claims of discriminating against the employers they acquired after the acquisition of the Sohio leading to retirement benefit disparities and miscalculation of the amount owed by using an 8% interest which reduces the employee's retirement benefits.
Compensation benefits are the monetary and non-monetary perks that an employee receives from the employer for work done and the rewards given to motivate them (Benn, Dunphy & Griffiths, 2014). Compensation includes fixed pay, commissions, overtime pay, bonuses, Profit Sharing, merit pay, stock options, and allowances. Employee benefits include insurance coverage benefits, paid time off, family and medical leave, retirement benefits, fringe benefits, employee wellness programs and reimbursement of tuition fees (Lewis, Rumeld & LeBeau, 2012). Employee compensation and benefits play a critical role in ensuring the continuity of the production process since they lead to low employee turnover rates, lead to higher motivation and job satisfaction levels and increase employee loyalty to the company (Shrimali & Chundawat, 2017) . The compensation and benefits packages are critical to the attraction and retention of a qualified and a competent workforce, and keep the company from legal battles which harm the corporate image and reputation and add on avoidable legal expenses to the company expenses (Werner, Inkpen & Moffett, 2016) . Compensation and benefits also facilitate the personal and professional development of the employees which in turn increases their productivity and aligns their behavior with organizational objectives (Armstrong, 2017). Compensation and benefits issuance is, therefore, a cornerstone for recruiting and retaining a healthy workforce for the production of high-quality products but the BP Company has on several occasions violated the employee compensation and benefits policies.
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The BP Company violated the payment of employee pensions (Shrimali & Chundawat, 2017) . A retirement plan is a financial plan that is supposed to replace employment income on retirement and is based on the employee’s age, earning history and tenure of service. The employer promises to pay the employee a specified amount of money upon retirement under the specified benefit plan or calculate the amount owed at retirement under the defined contribution plan (Benn et.al., 2014). The company is supposed to begin the payments after the retirement of the employee, and the sum is disbursed monthly, quarterly or as per the agreed duration. The BP Company failed to honor their legal obligation to thousands of employees after they reneged on their pension plans by up to seventy-five percent (Armstrong, 2017). The company discriminated against the employees they had acquired during the Standard Oil of Ohio Company acquisition by denying them the same interest rates as their counterparts from Amoco, Arco and other acquired companies leading to a disparity of up to 20% (Werner et.al., 2016) . The pension disparity was unfair since the employees worked at the same levels in the BP Company and therefore led to the violation of The Employee Retirement Income Security Act (Lewis et.al., 2012). The company misled the workers into believing that their pensions would remain the same or increase in value when they upgraded from the traditionally defined benefit plans where retirees’ benefits were based on average annual pay multiplied by years of service to a cash balance plan.
The cash balance pension plan entails the company setting aside a percentage of the employees' annually and paying interest on the money (Lo, 2015) . The plan reduced the pensions with one of the employees who sued the company receiving $2,700 instead of the $5,800 he would have got under the original pension calculation plan and stood to lose over $400,000 if he took the pension all at once (Shrimali & Chundawat, 2017) . The employee with that deficit was a low level, and managers and other higher level employees were losing up to a million dollars and above in retirement benefits (Ferenczy, 2016). The employees have accused the company of refusing to pay them their benefits, and many of them have quit from their jobs in disappointment and filed for lawsuits. After the former Sohio employees noticed the benefits disparity between them and their counterparts they complained to the human resource office but their complaints were ignored (Armstrong, 2017). The company hired an ombudsman to review the pension disparities and the differences in the promised pension figures versus the amount the company was ready to pay, and he ruled in favor of the employees (Lewis et.al., 2012). The company, however, kept the ombudsman's recommendations private and refused to honor them but he wrote to the employees with an attachment of his findings advising them to seek legal counsel.
The company has also been accused of failing to pay for employees overtime hours due to the misclassification of employees as exempt workers (Benn et.al., 2014). The salaried workers like store managers have to put in extra hours without compensation for the overtime which is a violation of their rights. According to the FLSA, forty hours are the standard work hours that employees are supposed to put into their job even the salaried employees (Ferenczy, 2016). Above the forty weekly hours counted from Monday to Friday the employee should be compensated equivalently at one and one-half times the normal hourly rate. The BP lack of compensation benefits led to the filing of a $100 million putative class action by former and current employees whose retirement benefits had been affected by the unfair calculations of the pension benefits (Lo, 2015) . The lawsuit claimed that the BP Company promised in writing not to reduce the former Sohio employees’ pensions after the acquisition of their former company (Shrimali & Chundawat, 2017) . The new plan led to a significantly lower rate of accrual and in most cases, a lower total pension benefit compared to the initial plan the employees had agreed on with the Standard Oil of Ohio Company before the acquisition (Werner et.al., 2016) . BP Company also used a high-interest rate of 8% in the calculations of payable pensions which reduced the amounts that the employees got on retirement exponentially since the higher the interest, the lower the amount deposited in the employees' accounts.
The primary role of the human resource department is ensuring that the company policies comply with the set labor laws and any other regulatory guidelines (Lo, 2015) . It is also tasked with the dispensation of employee compensation and benefits packages and in ensuring that the organization creates a conducive work environment that spurs invention, innovation and maximum productivity (Benn et.al., 2014). They also ensure that employee relations with the company and amongst themselves are healthy to create conducive work environment. The BP human resource management failed in almost all these duties because had they been efficient the Lack of Compensation Benefits could have been handled at the internal level without seeking legal action (Armstrong, 2017). The human resource department can rectify the lack of compensation benefits conflict between the disgruntled employees and the organization using various common human resource practices.
The compliance with Employee Retirement Income Security Act (ERISA) and the anti-discrimination laws would be an impactful HR practice in rectifying the situation (Shrimali & Chundawat, 2017) . Since all the problems stem from the company’s failure to honor a written agreement with the employees and the law is on the employees’ side as advised by the ombudsman the company can just settle and pay the employees what’s due to them (Ferenczy, 2016). The human resource manager can organize for a collaborative conflict resolution session where both the company officials and the aggrieved employees have a sit-down and come to a mutually beneficial agreement (Shrimali & Chundawat, 2017) . Negotiations would play a critical role in ensuring that both parties' needs are met to avoid the substantial cost of the lawsuit and the adverse effect more law suits may have on the already weak brand equity following the many lawsuits facing the company ( Werner et.al., 2016) . If the human resource department facilitates such a meeting and convinces the management to honor their obligations and also persuade the employees to drop the lawsuit the conflict would be resolved amicably (Lewis et.al., 2012). The compliance with laws and regulations and collaborative conflict management HR practices would, therefore, rectify the situation.
The human resource department should reassure the current employees who are part of the class action against the company of the security of their jobs to avert the retaliatory rumors going around (Lo, 2015) . Employees may become unproductive if they feel that their interests and opinions are curtailed by the administration and the management. Talking with the current employees can also help change their mind and drop the lawsuit and settle out of court and avoid incitement to the remaining employees since the employees have a considerable influence on each other’s attitude towards the organization (Shrimali & Chundawat, 2017) . A staff management committee can also be useful in negotiating with the employees who have the pension benefits grievances so that their cases can be reviewed and a way forward found (Ferenczy, 2016). The committee can play a critical part in preventing the escalation of the conflict between the company and the disgruntled retirees and employees from Sohio with pension disparities.
The human resource department should, however, desist from making contact with the employees who are already retired or have quit working for the company, but all the communications should be handled through attorneys (Ferenczy, 2016). The company should, therefore, hire a qualified and competent defense attorney to represent them during the lawsuit and carry out the negotiations in case there is a possibility of an out of court settlement (Lewis et.al., 2012). The human resource department should avail all employee records necessary for the case and also give insight into the reviewing of the company policies aimed at rectifying the situation.
In sum, the BP Company is facing the lack of compensation benefits lawsuit filed by former employees of Sohio. They claim that they were discriminated against by the company in the issuance of retirement benefits and the company applied a higher than agreed interest rate in calculating their pensions. The human resource department can rectify the issue by providing the necessary documents and information to review company policies, urge the company to comply to the ombudsman’s recommendations and pay off the employees and provide the required information in case the company doesn’t settle.
References
Armstrong, M. (2017). Armstrong’s handbook of human resource management practice New York: Kogan Page Limited.
Benn, S., Dunphy, D. C., & Griffiths, A. (2014). Organizational change for corporate sustainability Abingdon, Oxon: Routledge.
Ferenczy, I. H. (2016). Employee benefits in mergers and acquisitions 2016-2017 . Place of publication not identified: Wolters Kluwer Law & Bus.
Lewis, J., Rumeld, M. D., & LeBeau, I. B. (2012). Employee benefits law . Arlington, VA: ABA, Section of Labor and Employment Law.
Lo, S. H. (2015). In search of corporate accountability: liabilities of corporate participants . Newcastle upon Tyne, UK: Cambridge Scholars Publishing.
Shrimali, V., & Chundawat, D. S. (2017). Contemporary issues in human resource management New Delhi, India: Cyber Tech Publications.
Werner, S., Inkpen, A. C., & Moffett, M. H. (2016). Managing human resources in the oil & gas industry Tulsa, OK: PennWell.
