In Ireland, you have to retire at 65, don't you? Not necessarily. According to an EU directive, companies might be guilty of discrimination if they impose an across-the-board retirement age on their staff.

Currently, there is no statutory retirement age for employees in the private sector in Ireland, although many written employment contracts (including those in the public service) specify a retirement age of 65. Many other employers apply a "normal retirement age" based upon custom and practice within the employment. This is an evolving area of law and there's a growing view that if a retirement age is imposed on employees, it may constitute age discrimination - even where there is a retirement clause included in a written employment contract.

The Employment Equality Acts 1998 to 2008 prohibit discrimination in employment on nine separate grounds, one of which is age. Section 34(4) of the Equality Acts provides that "it shall not constitute discrimination on the age ground to fix different ages for the retirement (whether voluntarily or compulsory) of employees or any class or description of employees". Consequently, this appears to authorise employers to set a lower retirement age for one category of employee and a higher age for another category.

The Equality Acts do not specifically authorise employers to fix a standard age for all employees, but this practice has been adopted by many employers for decades.

European Law

Council Directive 2000/78/EC, which establishes a general framework for equal treatment in employment and occupation, prohibits direct age discrimination in employment. Ireland implemented the directive into national legislation through the Equality Acts. The directive recognises that differences in treatment on the grounds of age may be justified by member states under certain circumstances. Article 6(1) of the directive says that discriminatory treatment directly based on age is permissible subject to two conditions:

  • It must be objectively and reasonably justified by a legitimate aim within the context of national law (and the directive sets out examples of such aims and refers to legitimate employment policy, labour market and vocational training objectives), and
  • The means of achieving these aims must be appropriate and necessary.

This EU requirement for discriminatory treatment to be "objectively and reasonably justified" is not referred to in Section 34(4) of the Equality Acts but it has been an important consideration in a number of recent decisions by the European Court of Justice (ECJ). Accordingly, it is now questionable as to whether employers are still within their rights to impose retirement ages as a matter of course.

In the 2007 case of Felix Palacios de la Villa v Cortefiel Servicios SA, the ECJ considered the legality of a compulsory retirement age of 65 contained in a Spanish collective agreement. The ECJ held that while the domestic legislation was discriminatory on grounds of age, it could be justified in accordance with article 6(1) of the directive. The compulsory retirement of workers who reached a certain age was introduced into Spanish law during the 1980s against an economic background of high unemployment. Its aim was to create opportunities in the labour market for those looking for work. The ECJ determined that this objective was a legitimate aim and that the means used to achieve it were appropriate and necessary. Also, compulsory retirement was conditional on the affected workers having qualified for a retirement pension.

In 2008 in Donnellan v Minister for Justice, Equality and Law Reform, the Irish High Court ruled that it was lawful for the assistant garda commissioner to be retired at 60. Mr Donnellan claimed that his retirement was in breach of the terms of the EU directive. The court held that the imposition of a mandatory retirement age was indeed discriminatory under the directive, but found that the policy was objectively justified on the basis that this ensured motivation and dynamism through the increased prospect of promotion due to senior staff being retired. Of particular relevance was the fact that the imposition of retirement was assessed individually and that staff affected could apply to continue their employment, in which event their individual position would be considered.

In 2009, the ECJ considered the lawfulness of the UK statutory 'default retirement age' of 65 in Age Concern England v Secretary of State for Business, Enterprise and Regulatory Reform. The regulations adopted by the UK in relation to a compulsory retirement age of 65 were challenged by Age Concern, a lobby group for older people. In that case, the ECJ gave guidance on when exclusions from age discrimination could be allowed under the directive. Its ruling focused on the need for member states to set the exclusions on the basis of objective and reasonable legitimate aims, such as employment policies or the labour market or vocational training objectives.

The ECJ sent the issue back to the English High Court to adjudicate, and it held that while the imposition of a default retirement age was justifiable in 2006 when the regulations were adopted, this was not to say that such an objective justification would still be valid in the future. The current position is that the UK default retirement age is now being phased out.

In 2009 in Ireland, the claimant in the case of Calor Teoranta v McCarthy launched a challenge to the compatibility of section 34(4) of the Equality Acts with the directive. The case was first heard in the Labour Court and then appealed to the High Court. Mr McCarthy claimed that he was discriminated against on the grounds of age when he was forced to retire on his 60th birthday, while colleagues were permitted to work until 65. While McCarthy succeeded on the basis that there was an agreement in place that he could work until 65, the Labour Court decided that, based on the facts of the case, it did not need to determine whether the Irish position was compatible with EU law.

However, importantly, it did indicate that if such a question was central to determining a case, it would need to consider seeking guidance from the ECJ. Importantly, the Labour Court also stated its view that if a State cannot introduce a mandatory retirement age unless there is objective and reasonable justification for doing so, it would appear that an employer would be similarly restricted in applying a contractual retirement age. The case was appealed to the High Court, which upheld the Labour Court's decision.

In this difficult economic climate, it is likely that employers will face more challenges to the dismissal of older employees, whether arising from redundancy, retirement or otherwise. It is also likely to become more difficult for employers to justify an across-the-board retirement age for all occupations.

It would seem that the days of employers choosing a retirement age for their employees may be limited. This is an area which requires clarification by the courts, or, preferably, the Government. Until such clarity is provided, employers need to carefully consider the circumstances of any dismissal based upon reasons of retirement.