Retirement in the Workplace: Is it enforceable?
Retirement is a topic that is continuing to gain momentum in the employment law sphere. In the past number of years, there has been a surge in case law directly linked to retirement age of employees, and whether organisations can stand over compulsorily retiring employees from work on the attainment of a certain age. At present, there is no compulsory retirement age for employees across Ireland, however that is not to say that organisations cannot enforce retirement age for employees of the organisation if objectively justified and there is a solid business reason.
The default retirement age has historically been 65, however with the state pension age currently at 66, increasing to 67 for those born between 1955 and 1960, and 68 for those born after 1960, many employers are reviewing their company retirement ages. It should also be noted that the mandatory retirement age for most public servants is now 70.
Where a retirement age is in place and specified in the contract of employment, employers are advised to include a 'Retirement Policy' in the employee handbook. A retirement policy should set out objective justification for the retirement age, which is a legally necessary requirement to ensure a legitimate retirement age (as per The Equality (Miscellaneous Provisions) Act 2015). The objective justification must be reasonable and must aim to achieve a legitimate objective. What is an objective justification will depend on the role and the company, however as guidance, reasons which have been accepted by the courts in the past include:
- Health & Safety: It may be justifiable to have mandatory retirement ages for employees who work as drivers, pilots and in jobs which are physically demanding. In setting a mandatory retirement age, an employer would need to identify risks and hazards, rather than simply following a historically established retirement age.
- Succession Planning and establishing an age balance in the workforce: Employers need to plan for the future in order to ensure that they have the right people in place to support the business into the future. Mandatory retirement ages have been held to promote this by facilitating the retirement of older employees which opens up opportunities for younger employees who may have differing skill sets and experience.
- Encourage the recruitment and promotion of younger people: It has been successfully argued that mandatory retirement ages encourage employees to stay with, and progress within an organization and to motivate employees by the prospect of being promoted into more senior roles.
Code of Practice on Longer Working
In 2018, the WRC published a Code of Practice on Longer Working. Whilst the Code is not legally binding it does hold considerable influence and employers are minded to act in line with its contents. In summary, the Code of Practice deals with four issues:
- the utilisation of the skills and experience of older workers;
- the objective justification of retirement ages;
- practical retirement arrangements in the workplace;
- dealing with requests from employees to work beyond the normal retirement age
It is best still practice to specify a retirement age in contracts of employment so as to ensure that a compulsory retirement age forms a part of the employees terms and conditions. It is important for the organisation to be consistent in enforcing their retirement age to correspond with the contract. If an organisation deviates from this contractual condition, it may set precedence for the future.
The policy provided in Bright Contracts has been written to address the issues set out in the Code of Practice, however it must be noted that it is a draft policy. Before implementing this policy employers should review the content and ensure the content, particularly the objective justification included, genuinely apply to their company. Amendments can be made once the section has been included in the Handbook.
