In Ireland, there is no statutory mandatory retirement age, except in respect of certain public sector occupations. Therefore, as the law currently stands in Ireland, employers are permitted to set their own mandatory retirement ages. In light of the proposed amendments to the State pension age, many employers are in the process of reviewing their policy in relation to compulsory retirement ages. In addition, recent cases in the Court of Justice of the European Union (the “CJEU”), such as the Heyday case1, have prompted the UK to phase out default retirement ages as of 30 September 2011. This raises the question as to whether a similar course will be followed here in Ireland and the impact this will have on employers.

The Irish Position

While the Employment Equality Acts 1998-2011 (the “EE Acts”) prohibit unfavourable treatment by an employer based on nine grounds of discrimination, including age, section 34(4) of the EE Acts expressly provides that fixing a compulsory retirement age does not constitute age discrimination. Similarly, dismissals of employees who have reached “normal retiring age for employees with the same employer in similar employer” is specifically exlcuded from the ambit of the Unfair Dismissals Acts 1977-2007 (the “UD Acts”).

The European Position

However, the EE Acts, as currently drafted, are inconsistent with European Council Directive 2000/78/EC which requires any differences in treatment on grounds of age to be objectively justified. Most recently, the Equality Tribunal in the case of O’Neill v Fairview Motors Limited2 confirmed that Irish courts “have an obligation to interpret the Equality Acts in a manner that is harmonious in light of the Directive”.

Accordingly, Irish employers should consider the objective justification behind their mandatory retirement age and whether the imposition of that requirement to retire is a proportionate and necessary means of achieving that interest. Examples of objective justification include: to create opportunities in the labour market for those looking for work (Felix Palacios de la Villa)3, to encourage recruitment and promotion of young people and prevent possible disputes on the fitness of employees to work beyond a certain age (Fuchs v Land Hessen)4, to ensure better distribution of work between the generations (Rosenbladt)5, to ensure quality of service provision and address an age imbalance within a workforce (Georgiev)6 and to ensure motivation and dynamism through the increased prospect of promotion due to senior staff being retired (Donnellan v Minister for Justice, Equality and Law Reform)7.

In the recent case of Paul Doyle v ESB International Limited8, the Equality Tribunal commented that “age is different from other protected grounds. Age is not binary in the sense that a person is a man or a woman etc. Every person has an age which, as a continuum, changes over time”. Here, the Tribunal accepted that work involving electricity was such that legitimate health and safety concerns could arise in respect of older members of staff and that carrying out compulsory medical examinations, as suggested by the claimant, could cause some embarrassment to some employees. Significantly, although these safety concerns did not directly apply to the claimant in his role as a graphic designer, the Tribunal found that a legitimate employment policy entitled the respondent employer to maintain a retirement age that “ensures cohesion among all of its employees”.

On this basis, the view was formed that differing retirement ages for different groups of employees could threaten this cohesion. By pointing to the size of the respondent employer, the Tribunal deemed that the carrying out of individual assessments would be impractical and, therefore, the use of an age-proxy (65 in this case) was found to be a proportionate tool. Finally, the Tribunal was satisfied that the employer had to ensure that it could offer career pathways to employees to ensure “retention, motivation and dynamism among the respondent staff”. Accordingly, the Tribunal was satisfied that the employer had established a legitimate employment policy with a legitimate aim for the reason why its employees must retire at 65.

In the 2012 case of Sweeny v Aer Lingus Teo9, the Equality Tribunal found that, although no retirement age was specified in the claimant’s contract of employment, a compulsory retirement age of 65 could be inferred into the claimant’s contract on the basis that, as the claimant knew, or ought to have known, the compulsory retirement age for the respondent’s non-flying staff was 65. However, the Tribunal went on to ascertain whether the respondent’s compulsory retirement age served a legitimate aim/purpose and whether the means taken to achieve that purpose were appropriate and proportionate. In response to the respondent’s suggestion that it would be “peverse” that a pension scheme could pay pension benefits from a normal retirement date in circumstances where the employee continued to draw a salary from the respondent, the Tribunal found that it is “well established in both Community and Irish law that pension entitlement does not necessitate retirement”. Accordingly, the Tribunal found that no objective justification for age discrimination existed in the facts of this case and allowed the claimant to succeed on this basis.

Practical Impact

There has been a huge increase in claims in this area before the Employment Appeals Tribunal and the Equality Tribunal. To mitigate the risk of these claims, it is currently best practice for employers to specify a retirement age in their contracts of employment because as long as a compulsory retirement age forms part of an employee’s terms and conditions of employment, any dismissal on reaching such age will generally be held to be a fair dismissal.

It is equally important for the actual practice of enforcing that retirement age to correspond with the contractual documentation. Deviation from a contractual compulsory retirement age may set a custom and precedent of, for example, extended contracts, and may undermine the basis on which the contractual compulsory retirement age may be enforced.

Finally, it is recommended that a prudent employer consider, from the outset, the basis for imposing a compulsory retirement age and the objective justification for doing so.

Conclusion

Ireland is now at an impasse, balancing its current national law, which allows for the prescribing of compulsory retirement ages, against a host of European cases and, more recently, Irish cases, that have reiterated the need for any such retirement age to be objectively justified by reference to legitimate aims, as well as being a proportionate or appropriate and necessary means to achieving that aim. Ireland’s EE Acts, as currently drafted, remain inconsistent with EU legislation and EU case-law and this will need to be addressed.

It is a delicate balancing act for the courts in the meantime to interpret and apply European law to national situations which are not, strictly speaking, in breach of current national law. In light of the State’s decision to gradually extend the State pension age, an employee is now more likely then ever to query the legitimacy and enforceability of a compulsory retirement age set out in his/her contract of employment. The UK’s response has been to repeal the ability of employers to set default retirement ages without objective justification. It remains to be seen whether Ireland will follow suit.