by Catherine O’ Flynn, Partner and Head of the Employment & Benefits department at William Fry LLP
An increase in the number of workers seeking to continue in employment beyond the State pension age of 66 posed a key issue for many employers across 2023.
Are employers permitted to impose mandatory retirement ages?
Mandatory retirement ages remain a common feature in employment contracts in Ireland. The imposition of a mandatory retirement age is on its face discriminatory. However, it is permissible for an employer to set a mandatory retirement age provided that the practice is objectively justified. Section 34(4) of the Employment Equality Act 1998 (EEA) provides that it shall not constitute age-based discrimination to fix a retirement age for employees if the following conditions are met:
- it is objectively and reasonably justified by a legitimate aim; and
- the means of achieving that aim are appropriate and necessary.
Therefore, while section 6 of the EEA prohibits discrimination on the basis of age, an objective justification can be used to excuse measures which may otherwise be considered to breach equality legislation. An employer must be able to point to a business-case behind the imposition of the mandatory retirement age and show that their aim could not have been met by lesser means.
What might comprise an objective justification to the imposition of a mandatory retirement age?
The Workplace Relations Commission (WRC) published a Code of Practice on Longer Working in 2017 (available here) which provides guidance for employers on what may be acceptable as a legitimate aim justifying the imposition of a mandatory retirement age. Legitimate aims may include:
- Intergenerational fairness i.e. the progression of younger employees.
- Motivation and dynamism through increased prospect of promotion.
- Health and safety factors.
- Ensuring a balance of ages in the workforce.
- Personal and professional dignity.
- Succession planning.
Such factors must be considered on a case-by-case basis and assessed considering the specific role in question.
Have any recent WRC decisions considered the enforceability of a mandatory retirement age?
The WRC considered whether a mandatory retirement age was objectively justified in the following recent decisions:
- In Thomas Doolin v Eir Business Eircom Limited (2023) the WRC held that the imposition of a mandatory retirement age was not objectively justified, and the complainant was re-instated into his previous role. The WRC emphasised the requirement to assess each situation on a case-by-case basis to ensure that the imposition of a mandatory retirement age was objectively justified.
- In Patrick O’Callaghan v Ferrero Ireland Ltd (2023) the WRC made an award of €20,000 for discriminatory dismissal on the grounds of age following the imposition of a mandatory retirement age. The respondent sought to rely on health and safety grounds for the imposition of a mandatory retirement age which was applied consistently across the company. The complainant in this case had actual knowledge of the retirement age through his employment contract, the company handbook and the operation of the pension scheme. The core issue to be considered by the WRC was whether the compulsory retirement age of 65 was objectively justified. The WRC again emphasised the importance of considering mandatory retirement on an individual basis. An individual assessment must be carried out in determining whether the imposition of the mandatory retirement age is proportionate. Here, the employer had not carried out an individual assessment of the complainant’s application to continue working.
The timing for the establishment of such objective justification was considered by the WRC in Brendan Beirne v Rosdera Irish Meats Group (2023). The WRC placed weight on the importance of engagement with employees before the retirement date. It made an award of €30,000 for discriminatory dismissal on the grounds of age when the complainant’s employer forced him to retire at 65. This was done in accordance with the complainant’s contract of employment. The complainant had advised his employer that he wished to work beyond his 65th birthday. However, this was not permitted, even though other employees of the respondent had been allowed to do so. The Adjudication Officer was critical of the fact that the respondent did not consult or negotiate with the complainant before making the decision to enforce its mandatory retirement age. The respondent provided no evidence that any explanation of their refusal to grant the complainant’s request was communicated to the complainant at any stage of the process. The dismissal was found to be discriminatory.
What are the key take-aways from these WRC decisions?
- Objective Justification
The imposition of a mandatory retirement age is on its face discriminatory. For this to be lawful under the EEA, an employer must be able to establish that the mandatory retirement age in question was objectively justified. To prove objective justification an employer must be able to point to a legitimate aim and a necessary and proportionate means of achieving that aim. - Timing for Consideration of Objective Justification
Objective justifications should be considered by the employer prior to imposing the mandatory retirement age. The WRC will not look favourably on retrospective justification in the context of such claims.Where there is a mandatory retirement age, engagement with employees should commence 6-12 months before their retirement date to avoid the ambush factor and meaningful consideration should be given to employee requests to continue working. Employers should have regard to the Code of Practice on Longer Working which provides guidance on best practices when employees are approaching retirement age. An employer may decide to offer a fixed term contract to an employee post-retirement age and in such circumstances, the period should be specified. The EEA allows for the offering of a fixed term contract to a person over the compulsory retirement age for their employment if it is objectively and reasonably justified by a legitimate aim and the means of achieving that aim are appropriate and necessary. The terms of any such fixed term contract must not be discriminatory in nature.
Watch this space!
We await the Supreme Court decision in Mallon v Minister for Justice & Anor in which Seamus Mallon has challenged the statutory retirement age of 70 for county sheriffs. The Supreme Court will weigh in on whether objective justifications for a mandatory retirement age should be considered in the context of each individual employee or whether they can be assessed by reference to defined groups based on general probabilities of age, health and competence.
The government’s legislative programme for Spring 2024 also provides that the government is currently preparing heads of bill for the Employment (Restriction of Certain Mandatory Retirement Ages) Bill (the Bill). It is anticipated that the General Scheme of the Bill will be submitted to the government for permission to draft in the coming weeks. The Bill will seek to introduce measures that allow, but do not compel, an employee to stay in employment until the state pension age.
About the author
Catherine O’ Flynn is Head of William Fry’s Employment & Benefits Department. She advises on all contentious and non-contentious employment matters with a particular expertise in equality issues. Catherine also has significant experience advising clients in relation to confidentiality, restrictive covenants and severance related matters. Catherine has acted on behalf of a wide range of commercial clients and also regularly advises senior level executives. Catherine has lectured and written extensively in relation to employment law matters. She is a committee member of the Law Society’s Employment and Equality Law Committee and of the American Chamber of Commerce Employment Law Working Group.
