We have an employee approaching the age of 65 but is there a statutory mandatory retirement age? The employee’s contract of employment does not provide for a set retirement age, but employees normally retire at the age of 65, although there have been several exceptions. How do we treat this employee?

Jennifer Cashman writes:

Currently, there is no legal mandatory retirement age in Ireland, but public and private sector contracts generally provide for the age of 65. How you treat the employee depends on the contractual situation, which could be fluid.


1. Mandatory Retirement Age - Developments

The Employment Equality Acts, 1998 – 2007 provide employers with discretion on fixing compulsory retirement ages. This means that if a contract of employment includes an express retirement age clause, the employer can under the legislation rely on this as a defence to an age discrimination claim. If however the employee works beyond this date, or if there is no express contractual retirement age, there is a strong argument that any attempt to arbitrarily retire an employee would be deemed discriminatory on grounds of age.

In the absence of a set retirement age in the contract of employment or in an occupational pension plan, the employer will have to rely on custom and practice within the organisation to highlight a set retirement age.

In respect of a statutory mandatory retirement age, it is useful for employers to be aware of recent developments in this area. A Government paper entitled "National Pension Framework" was published on 4th March 2010 and should prove to be a major development in the area of retirement.

Demographic projections indicate that there will be less than two people of working age to every person aged 65 or over by the middle of the century, which is in stark contrast to the almost six people today. As part of the reform outlined in the Framework, it is proposed for the Irish State Pension Age to be increased to 66 by 2014, 67 in 2021 and to 68 in 2028.

It is important for employers to appreciate the significance of a set retirement age being provided for in the contract of employment. There has been a surge of case law in this regard before the courts and tribunals whereby in the absence of a clear and identifiable retirement age, employees are claiming unfair dismissal and discrimination against employers who dismiss on grounds of retirement.


2. Claims arising through enforcement of retirement ages

An employee who challenges their retirement age will generally sue under the Unfair Dismissals Acts, 1877 – 2007 for unfair dismissal or under the Employment Equality Acts, 1998 – 2004 for discrimination . There is a defence in Section 2 (1) (b) which provides that the Acts do not apply where an employee has reached the normal retirement age for employees of the same employer in similar employment. If a successful claim is brought by the employee he/she would be entitled to receive an award of up to 2 years' gross remuneration.

In circumstances where there is no contractual retirement date, it is up to the employer to prove that there was a de facto retirement age, which has been established through custom and practice within the organisation.

A recent example of the reliance on custom and practice as a ground for implying a retirement age comes from a case taken against Connacht Gold where the EAT noted that the bulk of employees left at 65 but there were some exceptions. It was noted that two employees has requested extensions but those requests had been refused. The key point that the Tribunal accepted was that the normal practice was retirement age at 65.

A recent Equality Tribunal decision against Longford County Council is also insightful in highlighting the reliance on normal practice for retirement ages before the Courts and Tribunals. Here, the complainant claimed that he had been discriminated upon by virtue of the fact that he was forced to retire at the age of 66, despite other employees having been allowed to work beyond this age, and in some cases into their 70’s. The respondent relied on a Superannuation Code which provided for a set retirement age. The equality officer found in favour of the complainant, and in awarding €10,000 in compensation, concluded that working beyond the age of 66 was at the discretion of the employees and that nobody who asked to work on had been refused. Therefore, at the time the complainant reached the age of 66 it was custom and practice within the respondent that there was no retirement age.

It is safe to say that if an employer can establish from the facts that there is a de facto retirement age operating in the employment (even though this is not contained in any contractual documentation), then the employer will be able to force his employees to retire at that age.

Naturally, practical difficulties will arise in circumstances where employers have not had employees reach retirement age previously, or where it has not rigorously enforced a specific retirement age. In such circumstances, it may be difficult for employers in Ireland to defend unfair dismissal claims even if those claims arise from attempts to compulsorily retire employees who are very old.


Conclusion

In dealing with retirement, and in particular to the scenario outlined at the outset, best practice is for an employer to write to an employee to inform him/her that their employment will terminate on them having reached the age of 65. If the employee raises an issue with regard to the absence of a set retirement age in the contract of employment, the employer should be prepared to explain that the retirement age has been established through custom and practice within the organisation. Employees may be familiar with exceptions to the general rule, and the employer should be prepared to objectively justify these departures from practice, in circumstances where they will most likely have to do so in front of a tribunal.

It is interesting to note that from October 2011 the UK has decided that to require an employee to retire at any age is discriminatory unless it can be objectively justified. It remains to be seen how the Irish Courts will interpret this reform. In any event, as the economic climate in Ireland bottoms out, there will be an increasing need for employees to work further into their golden years. It is therefore prudent for all employers to consult with their contractual documentation to ensure that there is provision for a set retirement age, in the absence of which, an employer can find itself on shaky ground.