What’s New? - Compulsory Retirement Age

The Equality (Miscellaneous Provisions) Act 2015 was signed into law on 10 December last and is due to commence early in 2016. The Act makes numerous amendments to employment equality legislation. Of note for employers are the changes to the compulsory retirement age.

The amendment still allows the setting of compulsory retirement ages if the setting of the compulsory retirement age can be objectively justified. The amendment brings the Irish position in line with the Grounding EU Directive on age discrimination, case law from the Court of Justice of the European Union (CJEU) and the case law emanating from Irish courts and tribunals. There is a large body of case law which has made it clear that the setting of a compulsory retirement age must be objectively justified by the existence of a legitimate aim and evidence that the means of achieving that aim is appropriate and necessary. One of the consequences of the new law is that if fixed term contracts are offered post retirement the employer will have to demonstrate evidence of objective justification for the termination of employment at that point of expiry of the fixed term contract.

What can employers do to protect themselves from challenges to their retirement age clauses?

  • Ensure that all contracts of employment specify a retirement age and engage in dialogue with employees in relation to the setting of this age;
  • Have an "objective justification" for this specific retirement age. The objective justification must be one which pursues a legitimate objective, such as labour market objectives - the means of achieving that aim must be proportionate and reasonable. Reasons which have been accepted by the courts in the past include succession planning, and the promotion of intergenerational fairness;
  • Reserve the right to vary and review the retirement age as the needs of the business evolve and develop; and
  • Where employers receive a request from an employee to work beyond their retirement date they need to carefully consider how they respond to this. The legislation does not prevent offering a worker past retirement age a fixed term contract. However this now must be objectively justified. Such requests should be dealt with on a case by case basis with employers being mindful that the granting of such request creates precedent for other employees who may request such extensions and makes it more difficult for employers to endorse their normal retirement age.

For more information please contact Sinead Grace or your usual contact on the employment team in A&L Goodbody.

Date published: 06 January 2016