A recent WRC decision provides a timely reminder for employers intending to enforce a contractual retirement age.

The law

Ireland does not have a statutory retirement age. Employers generally rely on a contractual term of employment when seeking to retire employees on their 65th birthday. Other employers rely on custom and practice or point to the “normal retirement age” referenced in an occupational pension scheme.

Employers need to carefully navigate a potentially discriminatory contractual term (terminating employment because of age) to comply with their obligations under the Employment Equality Acts (“the Acts”). The Acts do not expressly prohibit retirement ages. However, a mandatory retirement age must be objectively justified by a legitimate aim and the way in which the employer achieves that aim, must be appropriate and necessary.

In more recent years, employers can use the guidance set out in the Code of Practice on Longer Working. It is particularly helpful as a tool to start the retirement conversation for employees who do not have a contractual retirement term. It provides a clear way in which to fairly manage an application from an employee who wishes to work beyond their retirement age. Recognising the benefits of the experience of older workers, as well as the difficulty to source good talent, employers are more frequently providing retiring employees with the opportunity to work beyond their retirement on a post-retirement fixed term contract.

For employers who do not have such a need, the Code of Practice includes a list of examples which may be relied upon as an “objective justification” for enforcing the employer’s retirement age. These include:

• Intergenerational fairness
• Health and Safety
• Motivation and dynamism (increasing prospect of promotion)
• Balanced age structure
• Personal and professional dignity
• Succession planning

Caselaw has demonstrated that “objective justification” is not an easy test to meet. The WRC will require the employer to prove that they have considered the specific circumstances for the retiring employee and that they have clear evidence to support the reason relied upon.

For example, in a previous EY Law Insight we examined caselaw which demonstrated it was not an “objective justification” to state that retirement was “the norm”. In fact, legislation that directed a mandatory retirement age for public servants was not even accepted as an “objective justification” for retiring an employee.

In the WRC decision discussed below, the WRC has once again made it clear that where an employer is seeking to apply a universal mandatory retirement age, it must take a case-by-case approach when deciding the reasons why that particular employee should be retired.

The case (ADJ-00045261 - Workplace Relations Commission)

At 61 years of age in 2019, the employee joined the company as a Desktop Support Agent. His salary was €35,000. Within a year of starting his employment, the company’s retirement age was increased to 65 to align with the employer’s pension schemes. A notification of the increased retirement age issued to all employees in 2020. In line with the Code of Practice, the employer provided 6 months’ notice to the employee that he was approaching his retirement age (1 July 2023). The employee applied to work beyond his retirement age. The employer met the employee to hear his application and refused his request (providing reasons). The employee appealed the decision. The employer refused the employee’s appeal. The objective reasons provided included: intergenerational fairness, succession planning, upholding the employee’s dignity (especially in a “safety critical” role) as set out in the employer’s retirement policy. The employee retired in July 2023.

The WRC noted that three other employees were permitted to work beyond their 65th birthday for exceptional reasons. The WRC reviewed the specific circumstances of the employee and noted that the desk-based role was not safety critical (although 85% of the employer’s other roles were in field work and safety critical), nor was it very senior (therefore not impeding another person from getting a promotion).

The WRC found that retaining the employee in this non-strategic role would not affect the succession plans of the organisation. In conclusion, the WRC found that the reasons set out in the employer’s retirement policy did not objectively justify the retirement of this employee. There was no element of an individual assessment, or the application of the objective justification directed specifically to this employee.

The decision was also critical of the employer’s failure to consider the employee’s future job prospects and the 40% reduction in income losing his salary to social welfare payments.

The WRC upheld the complaint of discrimination on the grounds of age. Rather than awarding the employee compensation (as has been the case in the majority of similar cases), the WRC awarded reinstatement, noting that there had been an excellent relationship between the parties and that the Complainant was a much-valued employee. The net result of this decision is that the employee has a job for life (or until such time as his role is fairly terminated by reason of his ability to do the role, for example).

The employer has indicated its intention to appeal the decision to the Labour Court.

Key Learnings

• All contracts of employment should include an express retirement age.
• A retirement policy in line with the Code of Practice should be put in place and reviewed annually.
• Applications to work beyond an employer’s retirement age should be reviewed in light of the objective reasons set out in the retirement policy but applied to the individual employee’s circumstances.
• Any refusal to extend the retirement age should consider the employee’s personal circumstances and their ability to earn a livelihood into the future/access a pension. 

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