Mandatory retirement ages are common features of many employment contracts and/or company policies. However, there is a now a marked trend in employees requesting to work beyond what would have been regarded as the traditional retirement age of 65.

There is increasing pressure on employers to justify their position regarding mandatory retirement ages. The General Scheme of the Employment (Restriction of Certain Mandatory Retirement Ages) Bill, which has recently been published, proposes to introduce a ban on mandatory retirement below the current state pension age of 66.

Current Legislation Regarding Mandatory Retirement Ages

In Ireland, there is no statutory retirement age for private sector employees and many employers rely on contractual mandatory retirement ages. The Employment Equality Acts prohibit discrimination on the ground of age, however there is a provision for contractual mandatory retirement ages, provided the employer can show that it is reasonably and objectively justified by a legitimate business aim.

The Workplace Relations Commission has published a Code of Practice on Longer Working which sets out best practice in managing employees approaching retirement age. It also sets out the legitimate business aims for justifying mandatory retirement ages. Employers may justify a mandatory retirement age with one of several of the following business aims:

Furthermore, a supreme court ruling on the Mallon v Minister for Justice case noted that a significant factor in assessing whether a mandatory retirement age is “appropriate and necessary” is the financial impact on the person.

The Employment (Restriction of Certain Mandatory Retirement Ages) Bill 2024

This Bill proposes to prohibit an employer from enforcing a retirement age below the age of 66 where an employee does not consent to it.

The Bill comes on foot of a recommendation from the Pension Commission to allow, but not compel, employees to work until reaching the state retirement age, currently at 66.

Employees who are approaching their contractual retirement age and wish to continue working must give a minimum of 3 months’ notice to their employer. An employer may mandate that this notice is given up to a maximum of 6 months in advance.

Where an employee does not give notice of their intention to continue working, the employer may take it that they consent to retire at the contractual retirement age.

Employees who do not consent to retirement at a contractual retirement age lower than state pension age will be eligible to bring a claim to the WRC under the Unfair Dismissal Acts.

Top Tips for Employers

1. Follow the Code of Practice on Longer Working. Once a retirement clause has been incorporated into an employment contract, the employer must objectively justify such retirement age.

2. Employers choosing to enforce a mandatory retirement age on the grounds of the legitimate business aims highlighted above should have empirical evidence to objectively justify the aim.

3. Engage and consult with employees approaching the contractual retirement age in a timely manner so they are aware of the retirement policy and the justification for it. Consider the financial position of employees approaching mandatory retirement age and if feasible consider allowing an employee to continue on a contract of fixed duration.

4. Consider amending retirement clauses in your employees’ contracts. Having a mandatory contractual retirement age of 66 or above will avoid the inherent uncertainty in dealing with notices of objection and may prove easier to justify in the event of a challenge.

5. Where requests to work beyond retirement age are received, consider permitting employees to work beyond retirement in certain justifiable cases but on a fixed-term basis. New flexible arrangements for persons applying for the state pension were also introduced, allowing people to defer claiming their state pension up to the age of 70.

Employers should be cautious when unilaterally holding employees to contractual retirement ages and should take advice, as the awards for such cases can be significant.

Voltedge Management can provide expert support to help you navigate retirement queries to ensure your business is compliant with the latest employment legislation. Contact us at info@voltedge.ie or 01 525 2914 to learn more about how we can help.

Eoghan Harley, Voltedge Management HR Executive