A recent WRC decision looked at whether an employee who had reached the employer's compulsory retirement age had a legitimate expectation of a fixed term contract and whether or not she was unfairly dismissed in breach of the Unfair Dismissals Act 1977 (as amended).

In the case of Teresa McCoy O'Grady v Sodexo Ireland Limited (ADJ-00029694), the Complainant claimed that she was unfairly dismissed after the Respondent refused to extend her fixed term contract on the basis of her advancing age. This decision highlights the issues that can arise in relation to mandatory retirement ages, as well as the limitations of bringing this type of claim under the Unfair Dismissals legislation, as opposed to under the Employment Equality Acts 1998-2015.

Background

The Complainant was employed as a chef from 6th February 2012 to 27th March 2020 and her salary was approx. €28,600 per annum. The Complainant was aged 66 at the time her employment was transferred to the Respondent in November 2019 pursuant to the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003. As part of the transaction's TUPE due diligence, the Respondent was made aware of a six month extension to the Complainant's post-retirement contract by the transferor. This six month extension was due to expire in March 2020.

Within the business, there had been a practice of allowing staff to continue working past the Respondent's normal retirement age if they were capable of doing so. The Complainant was working 30-40 hours per week as a Chef, and claimed she was under the impression that there would be no issue with her continuing to work for the Respondent past retirement age.

In February 2020, the management team arranged a meeting with the Complainant to discuss the expiration of her contract. In this meeting, the Complainant alleged that the Respondent informed her that she would be retiring on the 29 March 2020, as she was 'well past retirement age.' The Complainant stated that this was the sole reason given her to explain why her contract would not be extended.

The Respondent's position

The Respondent argued that it terminated all contractual relations with the Complainant in line with the terms and conditions of her contract and on the basis that she had exceeded the normal retirement age.

The Respondent relied on Section 1 of the Unfair Dismissals Act which defines an unfair dismissal as; “the termination by his employer of the employee’s contract of employment with the employer, whether prior notice of the termination was or was not given to the employee”.

It further relied on Section 2(1) of the Unfair Dismissals Act which contains an exclusion and states that the Act shall not apply in relation to persons who are dismissed and who, on or before the date of  dismissal, have reached the normal retiring age for employees of the same employer in similar employment.

Decision

The Equality (Miscellaneous Provisions) Act 2015 provides that employers may only set a mandatory retirement age to achieve an aim which can be reasonably and objectively justified and the setting of that retirement age must be appropriate and necessary.

The Adjudication Officer ultimately found that the Complainant did have a legitimate expectation to an extension of her contract and that the Respondent had not provided her with any objective reasons as to why her contract could not be extended.

Additionally the Adjudication Officer found that the Respondent failed to consider the provisions of the Employment Equality Act (which prohibits discrimination on any of the nine discriminatory grounds, including age) and failed to properly engage with the Complainant.

The Adjudication Officer found that the Complainant had been unfairly dismissed.

Under the Unfair Dismissal Act, the maximum compensation that an Adjudication Officer can award is two years remuneration, based on the employee's loss of earnings and the employee has a duty to mitigate their loss.

The Adjudication Officer was of the view, in this case, that the Complainant had failed to mitigate her losses, either by seeking alternative work or otherwise and made an order of compensation in the sum of €2,220 (4 weeks' pay).

Key takeaway points

Despite the clear finding by the Adjudication Officer that the Complainant was unfairly dismissed, the level of compensation awarded is low. Had the Complainant submitted her complaint under the Employment Equality Acts (as opposed to the Unfair Dismissals Act) it would have been open to the Adjudication Officer to make an award of up to a maximum of two years pay or €40,000, whichever is the greater and such an award would not have been limited to the Complainant's loss of earnings.

In addition, awards under the Employment Equality Acts may be exempt from income tax, whereas awards under the Unfair Dismissals Act are taxable as wages.

In terms of the substantive case, employers are reminded that while it is legally permissible to set a mandatory retirement age, there must be objective reasons for doing so.

Practically, employers should ensure to properly communicate and engage with employees in the period leading up to their retirement and consider what supports and services it can offer to those employees.

Annual Review of Employment Law 2021 ⚓︎

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