In this month's First Tuesday article, Noeleen Meehan, Associate in A&L Goodbody's employment law group, considers some frequently asked questions in relation to contractual retirement ages and age discrimination against the backdrop of a number of recent high profile decisions.

1. Should a retirement age be included in contracts of employment?
2. Should you include the objective grounds for the retirement age?
3. What if you change your compulsory retirement age to match the state pension age?
4. Are there guidelines on responding to requests to work beyond the mandatory retirement age?
5. Can we specify that a degree is an essential criterion when advertising a job vacancy?
   
   

Q. Should a retirement age be included in contracts of employment? What if the retirement age set cannot be objectively justified?

Irish law, as it currently stands, does not prohibit employers putting in place a mandatory retirement age. However, case law at both European and national level, coupled with the Equality (Miscellaneous Provisions) Act 2015, requires an employer to be in a position to objectively justify the need for compulsory retirement by reference to a legitimate aim.

If an employer wants to have the right to compulsorily retire employees at a set retirement age, then the inclusion of an express mandatory retirement age in all employment contracts is the first step to successful achieving this. A number of recent decisions from the High Court and the Workplace Relations Commission (the WRC) highlight the importance of having a contractual entitlement to retire employees at a fixed retirement age.

In Quigley v Health Service Executive the High Court had to consider whether a general practitioner could be required to retire at age 65 in circumstances where his contract did not specify a retirement age. Mr Quigley sought an interlocutory injunction to restrain his dismissal pending the hearing of his High Court challenge to his forced retirement. His employer, the HSE, contended that the requirement to retire at age 65 had been implied into Mr Quigley's contract of employment by virtue of the fact that age 65 was the statutory retirement age for permanent officers who joined the public health service at the time he did. However, Mr Quigley adduced evidence that no other general practitioner employed on the same contract as his had been retired at age 65, and that two doctors who worked in the same area were, in fact, over age 65. This evidence fatally undermined the HSE's arguments. The High Court granted the injunction on the basis that it was not satisfied that a retirement age could be implied into Mr Quigley's employment contract.

More recently, in the case of Valerie Cox v RTE, the WRC found that RTE discriminated against Ms Cox on the basis of her age by compulsorily retiring her at the age of 65 in circumstances where there was no reference to a mandatory retirement age in either her contract of employment or RTE's employee handbook. The WRC also held that RTE failed to objectively justify Ms Cox's forced retirement at age 65 and awarded reinstatement and compensation in the sum of €50,000.

While the absence of an express retirement age is not necessarily fatal, the Quigley and Cox cases demonstrate that it can be difficult in practice to rely on an implied retirement age, particularly if other employees have worked beyond this age. Working beyond even an express retirement age in and of itself undermines an employer's ability to objectively justify that requirement. Moreover, even if an employer can point to an express contractual retirement age, this will not, in itself, be sufficient to successfully defend a claim of age discrimination. As set out above, the Equality (Miscellaneous Provisions) Act 2015 requires that a contractual retirement age is objectively and reasonably justified by a legitimate aim and that the means of achieving that aim are appropriate and necessary.

What constitutes objective justification differs from case to case and depends on the particular circumstances of each case. However, some guidance in this area has been provided by the WRC in its recently published Code of Practice on Longer Working. The stated purpose of the Code is to set out, for the guidance of employers, employees and their representatives, best principles and practices to follow during the engagement between employers and employees in the run up to retirement, including responding to requests to work beyond the retirement age in the employment concerned. The Code reminds employers of the legal test of “objective justification” for mandatory retirement ages and explains the meaning of a “legitimate aim”, providing the following examples:

• Intergenerational fairness (allowing younger workers to progress);
• Motivation and dynamism through the increased prospect of promotion;
• Health and Safety (generally in more safety critical occupations);
• Creation of a balanced age structure in the workforce;
• Personal and professional dignity (avoiding capability issues with older employees); or
• Succession planning.

Further examples of what has been identified as amounting to a legitimate aim which is capable of objectively justifying differences of treatment on the grounds of age are set out in guidance published in the last couple of days by the Irish Human Rights and Equality Commission (the IHREC) in relation to "Retirement and Fixed-Term Contracts". The purpose of those guidelines is to provide guidance in relation to the use of fixed term contracts to those over the compulsory retirement age of the particular employment.

To the extent that an employer is unable to objectively justify its mandatory retirement age by reference to a legitimate aim (such as one of those set out above) and to demonstrate that the means of achieving that aim is appropriate and necessary, then it will fail to meet this limb of the legal test and will likely face difficulties in successfully defending an age discrimination claim. It is therefore paramount, when fixing a mandatory retirement age, that the employer not only makes this a provision of the contract of employment, but that the retirement age is also capable of objective justification, otherwise it will fall foul of employment equality legislation.

Q. In setting down a retirement age in a contract of employment, should you include the objective grounds for the retirement age or are you tying your hands for the future?

Given the statutory requirement to objectively justify a mandatory retirement age, it would be prudent for an employer to document the objective grounds for the particular retirement age set. This could be done within the employment contract or documented separately, for example, in a written retirement policy which sets out the retirement age and the objective reasons for same or a board resolution. In either case, it would be important to stipulate that the company's retirement age, and the objective justification for it, is subject to review and change from time to time so that employer has reserved itself the right to amend or update the retirement age and/or the objective justification for it as and when required. Indeed, it is best practice for employers to periodically review their company retirement age and document the thinking behind any decision to change the retirement age or leave it as is.

Q. If you change your compulsory retirement age to match the state pension age, does this compromise your defence when asked to justify a retirement age?

As long as the mandatory retirement age fixed by the employer is capable of objective justification both by the existence of a legitimate aim and evidence that the means of achieving that aim is appropriate and necessary, the fact that the new retirement age aligns with the state pension age should not compromise the employer's ability to justify that retirement age. However, the amended retirement age should not be linked to the fact that employees' pension will come into payment at this age as this has been held not to amount to an objective justification. If the employer chooses to increase its retirement age to 66, it should be on the basis of some other objective reason(s), not linked to the accessing of State pension benefits.  

Q. Please provide some guidelines on responding to requests to work beyond the mandatory retirement age.

The Code explains how parties should deal with a request by an employee who wishes to work beyond the mandatory retirement age including:

• Ask - are there good grounds on which to accept or refuse the request, e.g. can the retirement be objectively justified?
• Is the employer taking an equal and consistent approach to addressing this request?
• Will a fixed-term contract be used post retirement for a defined period? It is important to note that the Equality (Miscellaneous Provisions) Act 2015 requires that a fixed-term contract post-retirement age must be objectively justified.
• Would a more flexible or part time arrangement work post retirement?

The Code also sets out a recommended procedure for dealing with requests to work longer, as follows:

• The request should be made in writing no less than three months from the intended retirement date, to be followed up with a meeting between the employer and employee. The employee should be listened to and any decision should be made on fair and objective grounds.
• The employer’s decision should be communicated to the employee as early as practical following the meeting.
• Should the decision be to offer a fixed-term contract post-retirement age, the period should be specified, setting out the timeframe, and the legal grounds underpinning the new contract should be made clear. Regard should also be had to the IHREC's recent guidance in relation to Retirement and Fixed-Term Contracts.
• Where the decision is to refuse the request, the grounds for the decision should be set out and communicated in a meeting with the employee. The applicant should have recourse to an appeals mechanism, for example through the normal established grievance procedures in the organisation.
• The employee should be offered the right to be accompanied to a meeting by a work colleague or union representative to discuss the request and in any appeals process around same.

The Code also recommends that employers train managers on the benefits of age diversity. This includes raising age discrimination awareness among employees and ensuring that there is a culture in the workplace where tolerance for discrimination is eliminated with a view to properly managing an older and more diverse workforce.

Finally, the IHREC recommends that its guidelines in relation to Retirement and Fixed-Term Contracts are read in conjunction with the Code.

Q. With respect to indirect age discrimination and given the higher proportion of ‘younger’ graduates in the working population, can we specify that a degree is an essential criterion when advertising a job vacancy?

The Employment Equality Acts 1998-2015 (the EE Acts) expressly prohibit direct and indirect discrimination on any one of the nine protected grounds – including age. The EE Acts prohibit such discrimination, whether direct or indirect, not only during the course of an individual's employment or its termination, but also at the access to employment or recruitment stage.

The distinction between direct and indirect discrimination is that while the latter can be objectively justified, the former cannot. Indirect discrimination arises where an apparently neutral provision, criterion or practice would put persons of one age (for example) at a particular disadvantage compared with persons of another age – unless that criterion is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.

The requirement for a successful candidate to have a degree may constitute indirect discrimination in circumstances where, although the requirement appears to be neutral on its face, older applicants may be ruled out from applying because they do not have a relevant degree or indeed younger applicants may not yet have achieved a degree on account of their age. Whether an employer will be in a position to defend this criterion will depend on the extent to which the degree requirement can be objectively justified. There is case law to the effect that service requirements (e.g. post-qualification experience etc.) may constitute indirect discrimination.

Prudent employers are advised to take careful consideration when scripting job specifications and requirements to ensure such criteria does not directly or indirectly discriminate on any of the protected grounds, including age.