New Guidelines on Retirement

The Irish Human Rights and Equality Commission has recently published the Retirement and Fixed-Term Contracts Guidelines, which provide guidance on the practice of forcing employees to retire at a predetermined retirement age (a practice that many organizations have abolished following the introduction of age discrimination legislation) and the use of fixed-term contracts to retain workers for a period after retirement. This comes shortly after the Irish government published its Industrial Relations Act 1990 (Code of Practice on Longer Working) (Declaration) Order 2017, which is also aimed at providing some clarity on this subject.

Recent developments in Irish law have restricted the application of a mandatory retirement age. With the exception of certain professions, there is no statutory mandatory retirement age in the private sector in Ireland. However, Irish law still permits employers to set their own voluntary or mandatory retirement age in an employment contract where this can be objectively justified (for example, with jobs requiring great physical strength). Similarly, offering a fixed-term contract to a person over the compulsory retirement age also requires objective justification.

The background here is that the Employment Equality Acts 1998 to 2015 (EEA) prohibits discrimination on nine grounds, one of which is age; therefore, the dismissal of an employee due to age could be interpreted as discrimination under this legislation. However, the Equality (Miscellaneous Provisions) Act 2015  amended the EEA to provide that setting a compulsory retirement age does not constitute discrimination as long as setting a compulsory age is capable of objective justification by a legitimate aim and the means of achieving that aim are appropriate and necessary.

Further guidance on working past a set retirement age is set out in the Code of Practice on Longer Working, together with best practices for employers when responding to requests to work beyond retirement age and guidance on pre-retirement procedures. The Code of Practice on Longer Working includes examples of what constitutes a “legitimate aim” for the purposes of the Equality (Miscellaneous Provisions) Act 2015, including intergenerational fairness, health and safety, and creation of a balanced age structure in the workforce. While the Code of Practice on Longer Working is not legally enforceable, the Workplace Relations Commission can take into account compliance with the code, or lack thereof, in its adjudications.

The guidelines provide clarification on providing fixed-term contracts to employees beyond retirement age in workplaces that have a mandatory retirement age.

Comment

Employers and advisors must carefully consider equality and retirement policies in light of the changes in this area. In order to successfully defend against an age-discrimination claim, employers must show that they have complied with the EEA, as amended, and that they have followed the procedures set out in the Code of Practice on Longer Working.

Due to state pension reforms and the increasing need for workers to stay in the workforce longer, some have called for the abolition of a mandatory retirement age completely. The Employment Equality (Abolition of Mandatory Retirement Age) Bill 2016, for example, aims to amend the EEA to abolish mandatory retirement ages in the workplace. As a private member’s bill, this bill is unlikely to succeed; however, when it was initiated, the government did suggest that it supported the bill, so it may be an indication of things to come.

It may be only a matter of time before mandatory retirement ages disappear from Irish employment contracts. For further reading on the subject, see William Fry LLC’s forthcoming 2018 report, “Age in the Workplace,” which examines Ireland’s changing retirement landscape.

Written by Catherine O’Flynn and Jeffrey Greene of William Fry LLC and Roger James of Ogletree Deakins