The issue of the Grey Ceiling (compulsory retiring staff from the workplace), has been on the European and Irish political agenda for some time now. There is an inevitable social tension between ensuring younger workers have access to the job market and allowing older workers to continue working into their golden years. Notwithstanding this there is a consensus that the traditional retirement age of 65 is no longer fit for purpose and governments are grappling with how to address this matter.
Current Irish position
There is no statutory retirement age for private sector employees in Ireland. While contractual compulsory retirement ages are still permitted in Ireland, since January 2016 all retirement ages must be capable of being justified on a legitimate and objective basis. Otherwise, such compulsory retirements will be, and have been found to be, age discriminatory.
What is a legitimate aim?
There is no legal definition of a legitimate aim. Some European and Irish Courts decisions provide some useful guidance as to what might constitute a legitimate aim of an employer thereby providing the objective justification necessary for a mandatory retirement age including:
- Intergenerational fairness - allowing younger workers to progress;
- Protecting health and safety;
- Adequate pension arrangements;
- Establishing a balanced age structure in the workforce; or
- Succession planning.
For an aim to be legitimate however it must correspond to social policy objectives and relate to employment policy, labour market conditions or vocational training. The aim should correspond to a public interest rather than a purely private interest particular to the employer, such as cost reduction or improving competitiveness.
Difficulties that may arise…
The Labour Court have found in favour of employees challenging a “forced retirement“ where there was no express retirement age or where the employer has sought to retire an employee earlier than other staff. Many employers that do not have clearly defined retirement ages may encounter difficulties in circumstances where older employees refuse to retire. Any changes to a retirement age need to be communicated and agreed with employees.
How can an employer fix a compulsory retirement age?
It is best practice that employers issue employees with a written contract of employment at the commencement of employment, which includes an express term as to the employee’s compulsory retirement age. This should be supported by a retirement age policy set out in the employee Handbook which sets out the justification for the chosen retirement age. This policy should be a “work in progress” and reviewed regularly by management to ensure it is up to date and relevant.
Where there is no express term as to compulsory retirement and the employee is a member of an occupational pension scheme, employers should exercise caution placing reliance on the scheme rules to establish the existence of a contractual retirement age. Employers and employees often confuse the retirement age set down in the company pension as being the “retirement age” but this is a completely separate matter. Pension age should however feed into your retirement policy and the justification for your selected retirement age.
Code of Practice and Guidelines
The Workplace Relations Commission prepared a Code of Practice under Section 42 of the Industrial Relations Act 1990 around the issue of working lives. The Code sets out the best practice in managing engagement between employers and employees in the run up to retirement and dealing with requests to work beyond what would be considered the normal retirement age.
The Irish Human Rights and Equality Commission (IHREC) released Guidelines in April 2018 dealing with Retirement and Fixed-Term Contracts to ensure that older workers who wish to continue in employment are not discriminated against in Irish workplaces.
Both of these guides are useful for Employers in dealing with the issue of retirement.
Political Trends and Next Steps
The Government announced in December 2017 that the compulsory retirement age for the majority of public servants is to be increased from 65 to 70. In replying to a Dail question in May 2018, Finance Minister Paschal Donahue indicated that draft legislation to bring this change would be published in June 2018. This change will inevitably mean that private employers will have to look at their own retirement practices. Starting this review process now is recommended to ensure smooth succession planning for your organisation.