27th January 2020 GDPR & Privacy Section

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Retirement Age Update

While contractual compulsory retirements are still permitted in Ireland, since January 2016 all retirement ages must under the Equality Acts be capable of being justified on a legitimate and objective basis.

In effect, this puts the onus on the employer to show that the retirement age chosen for that workplace is fair and reasonable. Otherwise, such compulsory retirements will be considered to be age discriminatory.

Proposed changes

In recent years, a number of private members’ bills have sought to lift the grey ceiling by tabling the issue of abandoning the concept of compulsory retirement in Ireland.

The Equality (Amendments Act No 2) Bill 2012 proposed prohibiting a compulsory retirement age of 65 with limited derogations.

A second similar bill two years later, the Equality (Abolition of Mandatory Retirement Age) Act 2014, proposed by Labour TD Anne Ferris, sought to abolish compulsory retirement ages where the employee is willing to continue to remain in employment.

As regards the Equality (Abolition of Mandatory Retirement Age) Bill 2014, the then minister Aodhán Ó Ríordáin advised in his speech on October 9, 2015, that the government did not intend to oppose this bill. He noted, however, that there were serious policy concerns which needed to be considered.

He suggested that the question arose as to whether this bill was strictly necessary as the Equality (Miscellaneous Provisions) Act 2015 already brought the law into line with the European position (but did not go as far as to remove a compulsory retirement age).

He noted in his speech that the proposed bill would involve setting aside the retirement provisions of most existing employment contracts on a unilateral basis and would have “serious implications for public sector employment, for pensions policy and for labour market policy generally”.

He noted that, as such, it would be a radical step and careful consideration needed to be given to the objective and whether there were other approaches that could avoid any legal pitfalls. This bill ultimately stalled.

A further bill is being proposed by Sinn Féin TD John Brady as the Equality (Abolition of Mandatory Retirement Age) Bill 2016 and this bill is working its way through the Dáil, but concerns have been raised as to aspects of the bill.

It is clear there is cross- party political support to abolish compulsory retirement, but concerns remain as to policy and costs. Notwithstanding, it seems inevitable that this change will become law following a global trend.

Contractual agreement

In the meantime, employers should ensure that any specified retirement age is clearly set out in the contract of employment and a clear retirement age policy is in place which justifies the organisation’s retirement age.

Retirement is the right of an employer to lawfully dismiss an employee upon reaching a certain age. It has traditionally been used as a means of lawfully managing the exit of older workers from the workforce, and generally seen as a means of allowing workers to exit employment with dignity and to avoid being dismissed on the basis of capacity or for poor performance. However, times are changing.

Longer working life

The traditional retirement age of 65 has been in place since the end of the 19th century and, since then, the average life expectancy has risen significantly.

World Health Organisation statistics show that global life expectancy increased by five years between 2000 and 2015.

This trend, combined with decimated pension pots, means more workers are ready and willing to stay in the workforce for longer.

This issue is likely to become more contentious in the coming years in light of the state pension age changes.

In 2014, the age of entitlement to the state pension was raised to 66 and further changes are coming down the tracks – 67 in 2021 and 68 in 2028. It is anticipated that more employees will look to bridge the income gap by remaining in the workforce.

Anne Lyne, Sunday Business Post, 11th June 2017

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Younger workers to be left behind in new Public Sector pay deal

• State plans to retain lower pay rates for 50,000 newest teachers, nurses and gardaí • Lower pay rates to cost young teachers €75,000 over the course of their career

The government is determined to keep a two-tier pay system in place in a new public sector pay deal, in a move that will amplify the division between younger and older public sector workers.

It will be a major flashpoint for at least 50,000 teachers, nurses, gardaí and other public servants who have been recruited on lower pay rates over the past six years.

They had expected that the talks on the new pay deal, starting next week, would bring them into line with their older colleagues.

But it is understood that the government’s firm position is that it will not pay “over the odds” for new recruits when there are no problems with recruiting teachers, gardaí, civil servants and council workers.

The key argument made by unions against lower pay rates for newer public sector workers was that it was affecting recruitment. Government sources, however, have pointed to the findings of the Public Sector Pay Commission, which found there was “no evidence” that the reduced pay rates for new entrants were affecting recruitment to the public service in general.

Official figures supplied to the commission show that there were:

● Around 43,000 applications for around 4,000 civil service posts in the most recent recruitment round in 2015;

● Around 5,000 applications for 650 new positions in the Garda Síochána last year, and

● Around 1,200 applications for 112 senior executive jobs in councils this year.

Unions privately acknowledge that their case for pay equality has not been helped by the findings of the pay commission report. Pay rates were cut by 10 per cent for teachers, nurses, gardaí and other public servants who joined after January 2011.

Although some of the cuts have been reversed, they are still two years behind on the salary scales. Teaching unions have estimated that the current lower pay rates for new teachers will cost them €75,000 over the course of their career.

Due to the limited money available for pay rises, any move towards pay equalisation for younger public servants will reduce the potential for pay rises for older public servants.

Unions believe, however, that it may be possible to increase pay for the 50,000 public servants who joined after 2013. They are on an average career pension that is far less valuable than the pensions for the other 85 per cent of public servants who joined before 2013. Unions believe that giving the post-2013 workers a higher reduction on their pension levy than longer-serving public servants would be a way of increasing their pay.

“You could design something around that,” a union source said.

Pay equality was the issue that ASTI campaigned on when it went on strike for three days last year. But getting rid of reduced pay rates for teachers and other education staff would cost €85 million per year and make it more expensive to recruit new teachers. There are similar reduced pay rates in place right across the public sector.

However, the public service pay commission did acknowledge there are shortages of nurses in mental health services and emergency departments. The HSE is also unable to recruit enough hospital consultants, radiographers and psychologists.

Fianna Fáil public expenditure spokesman Dara Calleary said that consideration should be given to higher pay in areas of the health service struggling to get recruits.

“The inability to fill certain positions is directly contributing to the major problems with waiting lists,” he said.

By Michael Brennan, Sunday Business Post,