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Mandatory retirement age is a key feature of many employment contracts in Ireland. As an increasing number of people are seeking to work beyond this age, several significant employment law considerations have arisen.
Employment Equality Act
According to Section 34(4) of the Employment Equality Act 1998 (“EEA”), an employer can impose a mandatory retirement age only if it is objectively justified. The EEA states that it is not discriminatory to impose mandatory retirement ages. However, the setting of contractual retirement ages must be objectively justified by a legitimate aim and the means of achieving that aim must be appropriate, necessary and could not have been achieved by lesser means.
Objective Justification
In the recent decision of the Workplace Relations Commission (the “WRC”) in Thomas Doolin v Eir Business Eircom Limited ADJ-00045261, the Adjudicator found the Complainant established a prima facie case of discrimination when he was dismissed by the Respondent by reason of the implementation of a mandatory retirement.
In this case, after a series of meetings with his line manager and HR, the decision to mandatorily retire the Complainant on his 65th birthday was made. The Complainant who was employed as a Desktop Support Agent from 2019, submitted to the WRC that this was unfair as he performed well and enjoyed his role.
The WRC considered that as the Complainant occupied a junior “non-critical” role, he would not impede the career progression of any of his colleagues nor have a negative impact on succession planning within the company. Further, given the nature of his role, the WRC went on to find that the decision of the Respondent in refusing to allow the Complainant to work past the age of 65 was not objectively justified on any of the grounds set out in the Respondent’s retirement policy. The Adjudicator ordered that the Complainant be reinstated in his role with effect from the date of termination of his employment.
Health and Safety
However, in the 2023 case of Tommy Browne v MSR-FSR Managed Engineering Solutions, the WRC held that a mandatory retirement age of 66 for technicians who worked in a physically demanding role and with chemicals, was objectively justified given the health and safety implications.
Therefore, when inserting a mandatory retirement age into an employment contract it is key that employers consider their obligations in demonstrating that the mandatory retirement of an employee can be objectively justified by a legitimate aim.
Legitimate Aim
In 2017, the WRC published a Code of Practice on Longer Working which provides guidance for employers on what may be considered a legitimate aim in the imposition of a mandatory retirement age. These include:
Intergenerational fairness including the progression of younger employees;
Motivation and dynamism through increased prospect of promotion;
Health and safety;
The creation of age balances in the workforce;
Personal and professional dignity; and
Succession planning.
The above factors, however, will be assessed considering the specific role and the facts of the case in question.
Timing of Objective Justification
The WRC in Brendan Beirne v Rosdera Irish Meats Group (2023), considered the timing of the establishment of an objective justification for a mandatory retirement age and made an award of €30,000 for discriminatory dismissal on the grounds of age. Here, the Complainant’s employer failed to consult or negotiate with the Complainant before making the decision to enforce its mandatory retirement age, forcing him to retire at 65.
Not only should employers consider the objective justifications prior to imposing a mandatory retirement age, but they should also engage and consult with employees approaching retirement age so they are aware of the employer’s retirement policy and the justification for it in advance of the retirement date.
Incoming Legislation
More recently the Government has committed to a range of pension reforms including the Employment (Restriction of Certain Mandatory Retirement Ages) Bill (the “Bill”). If passed, the new legislation, subject to certain exemptions, will provide a statutory provision which will preclude enforceability of contractual mandatory retirement ages before the age at which an employee becomes entitled to the state pension. The General Scheme of the Bill is expressly without prejudice to the EEA, meaning that employers can still objectively justify, on an individual basis, to mandatory retirement ages in employment contracts.
The Bill comes as the Government also plans to increase the mandatory retirement age for Gardaí, members of the Defence Forces and prison officers, from 60 to 62. This is reflective of the reality across all sectors that people can and want to work in their chosen careers for longer.
Key Takeaways for Employers
Include a contractual retirement age in employment contracts together with an objective justification with a legitimate aim.
Review and update their retirement policy to support contractual retirement age which complies with the Code setting out the legitimate business reasons for fixing that retirement age in unambiguous terms and take steps to ensure that the policy is well-known and understood by all employees.
Engage and consult with employees approaching the contractual retirement age in a timely manner so they are aware of the retirement policy and the justification for it.
Employers should be cautious when unilaterally holding employees to contractual retirement ages and should take advice, as the awards for such cases can be significant.
Further Information
For further guidance on mandatory retirement or for any ancillary Employment advice, please contact Partner Marc Fitzgibbon or Solicitor Nikita Kelly in our Employment Team.