The issue of age discrimination is front and centre in employers' minds, not least because of a number of high profile cases recently reported in the media - one involving the compulsory retirement of ex-RTÉ broadcaster, Ms Valerie Cox, and another involving a UCD professor being passed over for promotion as a consequence of her age. The fact that both cases resulted in significant compensation awards, coupled with the backdrop of Ireland's ageing workforce and recent reports that the many of today's children will live to be 100, is a cause of concern for employers attempting to balance their business needs without falling foul of Ireland's equality laws.
Recent publications from the Workplace Relations Commission (the WRC) and the Irish Human Rights and Equality Commission (the IHREC) provide useful guidance for employers navigating the tricky waters of mandatory retirement do's and don'ts. We provide a summary of this guidance as well as some helpful action points for employers.
Why are age discrimination claims on the rise?
The decision to increase the State pension age, resulting in a 'financial gap' between the traditional retirement age of 65 and the 'new' State pension age of 66 has served as a catalyst for claims of age discrimination. Faced with a need to bridge the divide between the age of 65 (the retirement age habitually required by employers) and the new State pension age, the number of challenges to mandatory retirement are increasing as more employees look to keep working.
With the State pension age on track to increase again (to 67 in 2021 and to 68 in 2028), the current trend of employees challenging the legitimacy of compulsory retirement ages shows no sign of slowing down. In 2017 alone, 14% of all discrimination claims in Ireland related to the 'age' ground.
So what steps should employers be taking to mitigate against such claims?
What's the current legal position?
Ireland's Employment Equality Acts 1998-2015 (the EE Acts) expressly allow employers to fix a compulsory retirement age for staff without triggering the wrath of age discrimination claims. However, in the wake of a number of conflicting European and national decisions on this point, the Equality (Miscellaneous Provisions) Act 2015 confirmed that employers can only impose a mandatory retirement age where it can be objectively justified.
To reach this threshold, a mandatory retirement age must be (i) objectively and reasonably justified by reference to a legitimate aim; and (ii) the means of achieving that aim must be appropriate and necessary.
New guidance – the code
In December 2017 the WRC issued the Industrial Relations Act 1990 (Code of Practice on Longer Working) (Declaration) Order 2017 (the Code) to provide guidance to employers and employees of the 'best principles and practices to follow' in the run-up to retirement. Although not legally binding, courts will likely have regard to employers' adherence to the Code when evaluating their approach to mandatory retirement.
The Code sets out recommended best practice under four separate headings:
(i) Utilising the Skills and Experience of Older Workers
The Code advises employers to put in place age diversity training at management level as well as exploring measures around flexible working patterns and "proofing" policies and procedures for age bias.
(ii) Objective Justification
Helpfully, the Code provides a number of examples of what may constitute a "legitimate aim" by an employer when seeking to objectively justify a compulsory retirement age: (i) intergenerational fairness (allowing younger workers to progress); (ii) motivation through the increased prospect of promotion; (iii) health and safety (in the context of safety critical occupations); (iv) creation of a balanced age structure in the workforce; (v) personal and professional dignity; and (vi) succession planning.
(iii) Standard Retirement Arrangements
The Code emphasises the importance of 'good workforce planning' and advises employers to consider the provision of certain supports, for example, (i) suitable pre-retirement courses; or (ii) flexible or part-time working arrangements, as well as recommending that employers provide "clear information on how retirement procedures work" at regular occasions throughout an employee's career.
In particular the Code identifies the 'good practice' of notifying an employee of the plan to retire him/her 6-12 months in advance of the mandatory retirement age to allow for a reasonable period of planning. Such notification should be in writing but followed-up with a face to face meeting to: (i) ensure a clear understanding of the retirement date; (ii) explore measures to support the pathway to retirement; (iii) discuss transitional arrangements; and (iv) provide guidance and information.
(iv) Requests to Work Longer
Usefully, the Code sets out a recommended 'Request to Work Longer Procedure':
1. Written request: at least 3 months before the intended retirement date; to be followed up with an employer/employee meeting to discuss the case,
2. Decision: employer decision to be communicated "as early as practical" following the meeting;
3. Fixed-term contract: if applicable should specify the agreed timeframe and expressly provide that it is being offered in respect of the particular employee's case;
4. Refusal to Extend: employer should set out grounds for the decision to refuse the request and provide for an appeals mechanism; and
5. Right to be Accompanied: employee may be accompanied by a work colleague or union representative to discuss the request to facilitate longer working (and any appeal process).
New guidance - the guide
Earlier this month, the IHREC issued its own guidelines on 'Retirement and Fixed-Term Contracts' (the Guide). Read alongside the more practical and procedural guidance set out in the Code, the Guide provides insight into the legal issues that may arise for employers – in particular in the context of the utilisation of fixed-term contracts post-retirement.
The Guide emphasises the importance of ensuring that an employer has an objective justification for placing the employee on a fixed-term contract and sets out a non-exhaustive list of examples of 'legitimate aims' ranging from encouraging recruitment to sharing employment between the generations.
Action points for employers
1. Audit – Employers are advised to audit their current approach to retirement and handling requests from employees to work beyond a specified retirement age. In line with the Code and the Guide, an employer should stress-test the extent to which it can objectively justify the imposition of a compulsory age.
2. Paperwork - Put in place a retirement policy that clearly sets out both the existence of any mandatory retirement age (which should also be set out in staff contracts of employment) and the rationale (i.e. objective justification) for same. Such a policy should be drafted in accordance with the best practice set out in the Code and the Guide. This policy should be well known to staff and regularly reviewed and updated to ensure the identified justification remains valid.
3. Be consistent – Any decision by an employer, in line with the Code, to allow a particular employee to work beyond the mandatory retirement age, whether on a fixed-term basis or otherwise, may undermine the objective justification supporting such a mandatory retirement age in the first place. Such deviations from practice should be facilitated in exceptional circumstances only.