FACTS

The claimant had commenced employment as a security officer for the respondents in 2000 and signed and accepted his terms and conditions of employment. The company’s policy in the company handbook was that all employee’s must retire “not later than their 65th birthday”. 

In the past the company had automatically extended the retirement age and no issues had arisen. It was agreed in 2008 by the various unions, including the claimant’s union SIPTU, that extension would no longer be automatic. The claimant had indicated to HR that he did not wish to retire from his position but was informed that he would have to retire as per the terms and conditions of his contract.

DETERMINATION

The tribunal decided that the company was entitled to terminate the claimant’s employment as he had reached the retirement age as per the terms and conditions of his employment agreement. Interestingly, the tribunal stated that “the fact that the employer had allowed employees in the past to work beyond reaching 65 years does not now prevent the employer from enforcing what is clearly stated in the employment agreement”.

Full decision:
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LEGAL REVIEW

In the wake of the current economic situation, many employers have had to review their policies in the workplace. Employers must always be mindful that the employment relationship is governed principally by the terms and conditions of the contract of employment. Changing an employee’s retirement age is essentially a matter of contract law where a retirement age is provided for in an employee's terms and conditions and that age can only be changed with the consent of the employee. 

Therefore, it is important for employers to specify a retirement age in the contract of employment as the tribunal decision in this case makes clear that as long as a retirement age forms part of an employee’s terms and conditions of employment, any dismissal on reaching such age will generally be held to be a fair dismissal.

Many employers omit to make reference to retirement age because it is provided for in the pension scheme. Employers should specify the actual retirement age which may in turn be subject to variation within the terms of the pension scheme. The possibility of such variation should also be referred to by the employer. The most significant case in this regard is Donegal County Council v Porter [1993] E.L.R. 101 wherein the claimants were employed as firemen with the respondent. 

They were dismissed when they reached the age of 55. When the employees had commenced their employment there was no formal written contract and no specific reference to a date of retirement. They expected to continue to work until 60, provided they were capable of performing their duties. During their employment, the Department of Environment issued a letter recommending a retirement age of 55 for firemen and the council decided to implement its terms in full. 

The High Court held that the attempt by the respondent to force the claimants into retirement by dismissal at the age of 55 was an attempt to unilaterally alter the contractual situation and was a beach unless it could be justified in some other way.

The dicta from this decision has been consistently applied to circumstances where an employer attempts to rely on an earlier retirement age to the age the employee expects to remain in employment. (See for example Scally v Westmeath County Council [1996] E.L.R. 96).

Some confusion has arisen over change in the UK abolishing the “default retirement age” in the UK. This change in UK law, although prompted by European law, has no effect in Ireland. 

From a legal perspective, the real issue is of implied terms of contract. The express term of the contract (the written term) clearly stated that there was a retirement age of 65. Generally, an implied term cannot override a written term. However occasionally implied terms can become so notorious and fixed in stone, that in effect they clearly become an understood and accepted term of the contract. 

In this case, the automatic extension of the retirement age would have been certain and notorious and would almost certainly have been something that the employee could have relied upon. Unfortunately from the employee’s perspective, once that certain and notorious practice ceased, that amendment probably also became certain and notorious. Once the practice changed, the employee would have had a short window of opportunity of perhaps six months within which to object to the change in his terms and conditions, if he was to have a reasonable possibility of retaining those terms and conditions of employment. 

Any term of employment (other than those implied/protected by statute) can generally be lost if the employer asserts the change in terms and conditions and the employee acquiesces in that change by not asserting their right to the former terms and conditions. A period of acquiescence of perhaps six months is a good rule of thumb in the circumstances. 

CONCLUSION

It is important for employers to provide for a retirement age in their contracts. It is also important for the actual practice to match the contractual documentation. In the absence of the provision of a retirement age in employment contracts, the courts or tribunals will have to see what is the “normal” retirement age for employee of that category in that employment. 

Finally, it is important for an employer to obtain the consent of employees in writing, retain such copies and enforce this new retirement age should they wish to alter the retirement age for employees.