Brief

In this EY Law Insight, we consider the challenges surrounding mandatory retirement ages following recent decisions in the private and public sector.

The law

There is no statutory retirement age in Ireland in the private sector. The Employment Equality legislation permits employers to set a contractual retirement age, but the employer must show that the retirement age can be objectively and reasonably justified by a legitimate aim and the means of achieving that aim are proportionate and necessary. This is easier said than done, and over the years, we have seen many cases challenging an employer’s “objectively justified” retirement age.

By way of example, RTE sought to rely on the widely-used defence of “intergenerational fairness” in retiring one of its employees. The WRC disagreed with this objective justification and held that it did not accept that intergenerational fairness was required to allow more junior staff members to progress through the business and attract younger talent. RTE was directed to pay €100,000 to the retired employee.

Some employers expressly detail their retirement age in the contract of employment. Others will try to imply a contractual retirement by pointing to custom and practice, or an age at which employees will qualify for access to a pension, or a Retirement Policy in an employee handbook. Many will use the Code of Practice on Longer Worker to seek support and guidance to ensure they implement a fair process and understand what objective justifications can be used to implement a retirement.  But is that enough to fairly retire an employee when they reach a certain age?

New cases

Two recent cases offer further guidance to employers on how to manage a retirement. The first decision issued from the WRC and relates to the public sector (Michael O’Mahony and University of Limerick ADJ-00031897 - Workplace Relations Commission). The second is a private sector decision of the Labour Court (McLoughlin & Sons Hardware and Pauline Butler  -https://www.workplacerelations.ie/en/cases/2023/january/eda232.html).

O’Mahony -v- UL

Previously the subject of decisions from the WRC, the employee in this case had his employment status changed from contractor to employee following 17 years working with the university as a student counsellor. The reclassification of the employee’s status resulted in engagement with the university’s HR team regarding the appropriate terms and conditions of employment for the “new” employee.  As a public servant, this employee was required to retire at 65 in accordance with the Civil Service Regulation Act 1956. The employee was already 66 by the time he was placed on the university’s payroll. Various efforts were made to extend the employee’s employment, but ultimately the university was obliged to follow the overriding national legislation and enforce the mandatory retirement age set out in it.

The WRC rejected this argument, holding that it had the jurisdiction and a duty to give full effect to the provisions of EU law, even if they conflicted with national law. It quoted the decision of McKechnie J in Donnellan -v- Minister for Justice & Ors [2008] IEHC 467: “National measures relating to compulsory retirement ages are not excluded from consideration under [the Directive]. Any discrimination with regards to age must…serve a legitimate aim or purpose and the means taken to achieve that purpose must be appropriate.”

The WRC recognised that this can only be done on a on a case-by-case basis with reference to the particular facts of the employee.

The university’s sole objective justification for retiring the employee (when he was almost 69) was the legislation directing a mandatory retirement age for public servants. The second part of the test is to consider the legitimate aim or purpose and the means deployed to achieve that purpose. This must be appropriate and should go no further than is necessary. In this case, the employee was fully capable of working beyond 65 – he was 66 when his employment status changed, he was highly regarded by the university, efforts were made to employ him through a third party (Unijobs), and the employee continued to work in private practice at the age of 70. No evidence was put forward to objectively justify the background to the legislation directing retirement, nor the policy reasons for it. All of these factors led the WRC to making a finding of discriminatory dismissal on the grounds of age.

The employee was awarded €50,000, with the sanction intended to be “effective, dissuasive and proportionate”.

By way of update, this case was appealed to the Labour Court but has since been withdrawn.

McLoughlin & Sons and Pauline Butler

This case is a decision of the Labour Court. The employee’s appeal from the WRC was on two grounds, age and gender. The employee said that she was required to retire at 65, but male colleagues were permitted to remain in employment beyond 65. The employee’s two claims failed before the WRC and she appealed to the Labour Court.

By way of brief background, the employee was a receptionist for 22 years with the employer. She was placed on lay-off at the start of the pandemic and never returned to work. The employee applied for voluntary redundancy during the pandemic as other colleagues in the business were made redundant. This was refused. The employer stated that the employee would be retired on her 65th birthday in late 2020. There was some back and forth about the employee’s desire to work beyond her 65th birthday. The employer ultimately offered the employee a six-month post-retirement fixed term contract, but the employee was required to attend in the office to work.  Alternatively, the employer offered to pay the employee until her 65th birthday and would not require her to attend in the office. The employee did not engage in the process offered by the employer to discuss the options and ignored a number of invitations to meet.

There was no retirement age in the contract of employment. An occupational pension scheme provided the employee with access to her pension at 65. Retirement was advised to be in line with “custom and practice”.

The Court accepted that the employer employed three men beyond their 65th birthday for finite periods of time for clear and cogent reasons. The employee’s claim for gender discrimination was dismissed.

The Court upheld the employee’s complaint that she was discriminated against as the employer had fixed a retirement age and it was unable to objectively justify it. The objective justification put forward by the employer, that the retirement policy was “the norm” in the company, was not accepted.  The Court awarded the employee €3,000 in light of the circumstances of this case.

Interestingly, the Court did not uphold the allegation of age discrimination. The employer operated a clear practice of retiring employees at 65 and had offered to extend the employee’s contract for a 6- month period beyond her 65th birthday. The employer’s failure was not being able to objectively justify the retirement age.

Key Learnings

• Set a retirement age and include it in every contract of employment. Review this age regularly.

• Prepare a Retirement Policy in line with the Code of Practice on Longer Working.

• Communicate about and implement the retirement age. Ensure that post-retirement fixed term contracts are appropriately drafted and provided to employees working beyond the employer’s retirement age.

• Be able to objectively justify your retirement age on the date it is set. Examples from the Code of Practice include:
  • Intergenerational fairness
  • Health and Safety
  • Motivation and dynamism (increasing prospect of promotion)
  • Balanced age structure
  • Personal and professional dignity
  • Succession planning.