Introduction

The subject of retirement is tied up in legal loopholes and shrouded in sensitivities. Hence, it has become a hot HR topic. In some jobs, there is a statutory retirement age. This means that the retirement age is specified in law (e.g. for some public servants, like Gardai and Defence Force personnel). It is also common for employment contracts to have a mandatory retirement age (i.e. the age at which one must retire). This is usually pitched at 65 years of age. However, there is no statutory provision for private sector employees and many of the mandatory provisions simply don’t survive legal scrutiny. This makes it a difficult subject to broach with employees approaching their end of service date.

The Trend

In 2017 the Government’s Code of Practice on ‘longer working’ forecast that the proportion of older workers - and in particular, those who want to continue in employment beyond 65 – would grow significantly (S.I. No. 600/2017 - Industrial Relations Act 1990 (Code of Practice on Longer Working) (Declaration) Order 2017 (irishstatutebook.ie)). Given the increase in the State pension age, longer life expectancy and the cost-of-living crisis, this is an accurate assessment. It is also clear that many employers are struggling to find staff and to replace leavers. For example, only last year the Defence Forces raised the retirement age and extended service provisions for a range of ranks.

This trend is also apparent from the Government’s recent announcement – in response to a report from the Commission on Pensions – that by next year it ‘will introduce measures that allow, but do not compel, an employee to stay in employment until the State Pension age’ of 66. Notably, this tallies with findings from successive Industrial Relations News/Chartered Institute of Personnel and Development survey findings, that the number of employers in Ireland with a retirement age set at 65 has been declining over time, though around a third of private sector employers still use it as their deadline (Microsoft PowerPoint - 2022 For 6 Oct CIPD IRN Employment Practices 2022 Draft).

Case Law Lessons

Accelerating the turning tide on this topic is the range of legal precedents. One of the costliest determinations surfaced in 2021, when it was held that a nurse was discriminated against, as the only basis for her forced retirement was her date of birth. In this case, the Workplace Relations Commission’s ("WRC") Adjudication Officer ("AO") explained that case law requires an employer to show that the retirement age imposed: ‘is not only objectively and reasonably justified by a legitimate aim but that retirement at that age is an appropriate and necessary means of achieving that aim’ (ADJ-00027325). Several leading judgments were referenced in support of the decision. These included the Court of Justice of the European Union’s judgement in R v Secretary of State (2009 – EWHC 2336) , which held that retirement ages are not permitted for: ‘purely individual reasons particular to the employer’s situation such as cost reduction or a boost to competitiveness’. In the aforementioned WRC case, having regard to the relevant European Union Directive – which provides that sanctions be ‘effective, dissuasive and proportionate’ - as the nursing home had ‘made no effort to comply with the Employment Equality Acts’, the AO awarded the complainant €85,000 compensation.

It is also notable that already this year, both the University of Limerick and the Irish Wheelchair Association have found themselves on the wrong end of third party decisions, as they were adjudged to have subjected employees to age-based discrimination, by forcing them into retirement, giving rise to over €80,000 in compensation awards (WRC awards over €80,000 to two men ‘forced to retire’ – The Irish Times). These judgements follow hard on the heels of the Dublin Airport based ALSAA sports club case (reported in March 2022), when the club was ordered to compensate its receptionist to the tune of €28,000 for age and gender discrimination, due to her forced retirement at age 65 (ADJ-00029859).

 Coincidentally, in the following week it was reported – in the Pepsico case - that the WRC had awarded compensation of €40,000 to an operative for age discrimination, as he was retired at 65, when he wanted to stay on until 67 (ADJ-00027954). Significantly, the WRC’s AO held that it was clear that his employment had ended because of his age and the burden of proof fell on the employer. This means - as in the nurse’s case noted above - that the discrimination (i.e. the mandatory retirement provision) had to be objectively and reasonably justified by the employer, via a legitimate aim, whilst the means of achieving that aim had to be appropriate and necessary.

‘Objective Justification’

These decisions are all in line with the aforementioned Code of Practice, which stipulates that a mandatory retirement age must be capable of ‘objective justification’, via a legitimate aim, with evidence that the means of achieving that aim are appropriate and necessary. The Code provides examples as to what constitutes a ‘legitimate aim’, including:

• Intergenerational fairness (allowing younger workers to progress);

• Motivation and dynamism through the increased prospect of promotion;

• Health and Safety (generally in more safety critical occupations);

• Creation of a balanced age structure in the workforce;

• Personal and professional dignity (avoiding capability issues with older employees); or

• Succession planning.

To Talk Or Not To Talk?

Notably, in the aforementioned Pepsico case, the AO was ‘struck’ by the ‘void in the company interface with the complainant in preparation for retirement’. On the same theme of ‘interface with the complainant’, shortly before the Pepsico finding, the WRC held that an employer (Sodexo) ‘failed to properly engage with the complainant’,when it compulsorily retired its ‘excellent chef’, when there was ‘no objective reasoning why this employment should not be extended’ (ADJ-00029694). Given the AOs emphasis in both cases on ‘interfacing’ (i.e. talking) with employees, questions still remain as to whether an employer should raise this sensitive subject with an employee facing retirement.

In this regard, it is illuminating to recall the advice from Britain’s Advisory, Conciliation and Arbitration Service (ACAS)  Retirement | Acas (nationalarchives.gov.uk), warning that normally an employer must not:

• raise or prompt a discussion about when an employee might retire;

• ask an employee questions such as 'when are you planning to retire?'; or

• suggest they retire, put pressure on them to retire or force them to retire.

However, should the employee raise the subject without being prompted, then the employer/manager can discuss it, albeit being careful not to make any discriminatory remarks in the course thereof. ACAS also explains that an employer can ask an employee - no matter what their age - about their work plans in the short, medium and long-term and about how they view their contribution to the organisation. However, it's best to do this during the periodic performance appraisal or performance management type review, wherein the employer must not:

• ask an employee a different set of questions because of their age

• prompt a discussion about when they might retire, or suggest they go part-time or switch to another role because of their age.

Notably, employers’ concerns about ‘retirement conversations’ constituting age discrimination were significantly allayed in 2012, when a UK Employment Tribunal addressed the matter in Quick v Cornwall Council (ET/1701914/11). In this case the Tribunal found that age-related comments made during the course of employment did not amount to age discrimination. It emphasised the employer's plans to restructure the claimant's work area, noting that it was sensible to discuss and record information such as staff retirements in the succession planning process. Furthermore, it held that a discussion about retirement was ‘not per se any less favourable treatment because it cannot be imposed’. This case gave employers much needed reassurance, that it is legitimate to hold ‘retirement conversations’ with older employees in the context of workforce planning.

The Irish Position – The ‘Received Wisdom’

Arising therefrom, the received wisdom is that these discussions should be simple, confidential and informal, covering topics such as performance to date, employer expectations and the future aspirations of the employee. However, it is also advisable that they be held at least annually with all employees, thereby providing employers with a platform upon which to assess the retirement intentions of older employees.

In line with the aforementioned WRC decisions, the Government’s Code of Practice also advises that: ‘where no contractual retirement date exists, it is reasonable as part of workforce planning for an employer to raise and discuss with the employee their retirement intentions’.  Related thereto, the Code explains that employers can then consider the case for providing support, such as pre-retirement courses, a flexible or part-time working arrangement, counselling, etc. The Code also confirms that it is: ‘good practice for an employer to notify an employee of the intention to retire him/her on the contractual retirement date within 6 — 12 months of that date’ as it ‘allows for reasonable time for planning, arranging advice regarding people succession, etc.’ whilst ‘the initial notification should be in writing, it should be followed up with a face-to-face meeting’ that focuses on:

• A clear understanding of the retirement date and any possible issues arising;

• An exploration of measures that would support the path to retirement (e.g. flexible working, alternative roles up to the date of retirement);

• Transitional arrangements in regard to the particular post; and

• Assistance around guidance and information.

Part of the logic here is that if an employer has forewarning, an appropriate plan can be put in place. For example, the departing employee may well be agreeable to helping hire or train a replacement, thus passing on their knowledge to the newcomer. Given the Code’s (and the WRC judgements’) ‘green light’ to talk with employees on this sensitive subject, the advice from the psychological profession is also helpful. It is based on the fact that these conversations can be an important first step toward helping people to prepare emotionally for retirement. Sample open-ended questions for kick-starting it include:

• What parts of the job are you still enjoying?
• As you look to the future, what are your long-term plans?
• What would you like to accomplish on the job before you retire?
• What issues are most important to you when you consider retirement?
• In what way can we help you to ensure a smooth transition to retirement?
• Would you like to maintain a working or social relationship here?

Accordingly, it is clear that productive conversations between line managers and employees about retirement can be beneficial for both parties. Whilst employers need to plan to ensure that the skills and experience they're losing can be replaced, those approaching the end of their tenure may well have an expectation of support and information from their employer.

Insightful Review

An insightful review of this subject was recently undertaken at the University of Limerick, wherein it was found that WRC AOs are setting a high bar for ‘objective justification’ of mandatory retirement ages (Industrial Relations News - Article (irn.ie)). The study found that the common justification used  (of ‘intergenerational fairness’) is fast ‘losing its wide-reaching power’ as the WRC rejects it as a ground for objective justification for retirements (ADJ-00006972 and ADJ-00019084). Interestingly, in conclusion, the study recommends that employers:

(a) create a mentoring role for older workers, to assist with intergenerational fairness, whilst allowing older workers to remain with reduced responsibilities and/or hours; and

(b) start conversations about retirement well in advance.

Hence, the received wisdom is to start the conversation about life outside of work early on. This is facilitated where the employer:

• Asks annually what employees’ plans are for the upcoming year(s). For an employee grappling with the retirement decision, this may help to reduce fear and address real concerns.

• Has a retirement planning process that outlines the possibilities, process and the rewards and recognition that employees on the retirement trajectory are going to experience.

• Offers the services of a financial adviser, who conducts annual employee consultations designed to help retiring employees to prepare financially. Of course, this type of consultation can also be beneficial for employees whilst working, as financial (and debt) management are a major stressor for all age groups.

• Promotes wellness and self-care with ongoing education and supported activities.

• Extends opportunities to retirees to remain connected by inviting them to significant events and parties.

Conclusion

For legal, morale and work effectiveness reasons, it is clear that when discussing retirement with employees, one needs to be careful about the approach to the process and the conversation itself. Whilst it is appropriate to inquire about an employee’s retirement plans, one cannot normally impose retirement. Indeed, should the employee react negatively to the conversation, it is strongly recommended that it be dropped immediately. One effective way of avoiding singling anyone out and avoiding age discrimination allegations is to convene meetings with all employees individually (e.g. as part of the career development and/or performance review process). This conversation will be different in each case. Whilst a younger employee may want to focus on progression, the older one may opt to discuss their retirement or wind-down plans. Either way, for the best results and to avoid a long and costly legal quagmire, tread with care and consideration.