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Is it time to put compulsory retirement age out to pasture?


Monday, August 17, 2020

As published in the Business Post, August 16th 2020.

COVID-19 may have dominated the workplace agenda in recent months – but employers in Ireland can’t lose sight of any of the other issues arising in the course of the employer-employee relationship.

Of these, one of the most challenging is the subject of retirement age.  We are seeing an increasing number of cases being taken in the courts and the Workplace Relations Commission on the subject.

This issue is going to persist – and may actually lead to a dramatic change in the manner in which we think of retirement.

For many years, a retirement age of 65 was largely uncontroversial in Ireland – and employers and employees alike accepted that an employee would step down from their role at that point. Among other things, it suited employers to make room for the next generation of employees and it suited retiring staff because they could avail of the then-State Pension at the age of 65.

Life expectancy

However, significant increases in life expectancy have meant that employees no longer regard themselves as ready to retire at 65. In tandem with this, the development of equality law principles means that it’s much more difficult to argue that somebody is no longer capable of doing their job simply because they are older. Finally, increasing numbers of employees are taking action in the courts/WRC to enforce their rights – which means that the issue is getting increasing media attention. This by itself may prompt other employees to consider their position.

In 2018, for example, a very high-profile WRC case was taken by a former RTÉ reporter, Valerie Cox. She argued that she was no longer receiving work from the broadcaster because of her age – and she succeeded in convincing the WRC that she was right. Ms. Cox was awarded the sum of €50,000.

Increasing numbers of claimants are likely to follow her lead. In 2018, 2019 and 2020 we saw a number of similar claims in which attempts to impose a retirement age were overturned by the courts. Notably, in some of these cases the tribunal didn’t confine itself to a financial award like in the Cox case – it actually directed the employer to reinstate the employee in their old role. If that practice is followed by the courts and tribunals, it will make it even more difficult for an employer to compel retirement.

So what is an employer to do in this situation? Are we already at the point in time where retirement ages are themselves to be the subject of compulsory retirement?

We may not yet be at that point, but it is likely getting closer. Employers still have some scope to justify a mandatory retirement age. In 2015, the Oireachtas enacted legislation which introduced a level of clarity. In line with the 2015 Act, it is possible to fix a retirement age if:

  • This is objectively and reasonably justified by a legitimate aim; and
  • The means of achieving that legitimate aim are appropriate and necessary.

What this means in practical terms is that if an employer can identify an objectively sound reason for a retirement age, they can try to impose one. The tricky part is ensuring that the justification is robust, which can be challenging. An employer may be able to argue that succession planning is an essential part of their business, for example – an employer may say that they need to motivate younger employees by making it clear they will be promoted in time.

As well as that, certain businesses may be able to point to physical attributes needed to do the work properly – although an argument like that will definitely be the subject of close scrutiny by the courts/tribunals if an employee brings a claim.

Justifications

On this subject, in recent years the courts have had to review diverse justifications for having a retirement age. One of the complications in doing this is – obviously – because every business is different. What’s necessary in one may not be in another. An employer seeking to impose a retirement age will have to try, though. In addition, an employer will have to document its reasons – without a written Retirement Policy it is going to be near-impossible to convince a court or tribunal that you have a sound basis for insisting on retirement in your business.

Employers also sometimes overlook the necessity of including a retirement age in the employment contract – another potential trap.

Employers should also keep an eye on the bigger picture. It’s entirely possible that retirement ages will be the subject of further Governmental action in the coming years.  The 2020 Programme for Government, for example, indicates that the new Government intends to look closely at “sustainability and eligibility  issues” in connection with the State Pension.  What will happen next isn’t entirely clear, at least as far as legislative action is concerned, but there is no doubt at all that employees will continue to challenge compulsory retirement – and likely in increasing numbers.  Legislative intervention, of one form or another, is probably inevitable.

In fact, if the trend continues to move in the present direction, we may face a situation in a relatively short space of time in which working for as long as an employee wants (and is able) is the norm in Ireland.

For further information on the above article, or on other employment law queries, please contact Patrick Walshe.


Author

Patrick Walshe

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