In light of a number of recent European decisions, the thorny question has remained whether or not employers are entitled to impose a mandatory retirement age on employees in Ireland.
Many employers continue to include a mandatory retirement age of 65 in their employment contracts and employee handbooks despite the fact that the state pension age is gradually increasing in line with increases in life expectancy.
The Equality (Miscellaneous Provisions) Act 2015 (“the Act”) commenced on the 1 January 2016 and provides some welcome clarity on whether or not employers can continue to set compulsory retirement ages.
The Act states that employers may set compulsory retirement ages so long as they can objectively justify doing so. The Act does not set mandatory retirement ages; rather it gives employers a certain amount of discretion in setting a mandatory retirement age, if they wish.
The Act does not define what it is to objectively justify a retirement. However, recent Irish and European case law has considered the following examples sufficient to objectively justify the imposition of a mandatory retirement age in certain circumstances:
- Health and safety concerns in relation to older staff members;
- Offering career paths to ensure the retention of staff;
- Creation of opportunities in the labour market;
- The establishment of an age balanced workforce;
- Certainty in business planning.
It is important for all employers to review their retirement ages to ensure they can objectively justify the imposition of a compulsory retirement age in the event of a claim of age discrimination.
Options for an employer include maintaining the current retirement age and reviewing the current retirement age to align with the state pension age. In each case the employer must ensure that they can objectively justify their position.