22nd January 2020 GDPR & Privacy Section

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Retirement Age Update

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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