Ireland: Employment Law Update: Compulsory Retirement Ages

While there is no statutory compulsory retirement age in Ireland, it has been the practice of many employers to set a retirement age of 65 to coincide with the State Pension age. With the increase in the age of qualification for the State Pension from 65 years to 66 years in January 2014, it is possible that there may be an increase in age discrimination claims by employees who wish to remain at work beyond a compulsory retirement age of 65 and where their employer insists that they must retire.

Is the Setting of a Retirement Age Discriminatory?

Discrimination in the workplace on the basis of a person’s age is one of the nine grounds prohibited under the Employment Equality Acts 1998 – 2011 (the "EE Acts").  However, section 34 of the EE Acts also lists certain exceptions to discrimination, including one which provides that it does not constitute discrimination on the ground of age for employers to fix different ages for the retirement of employees. It also provides that it does not prohibit an employer from having different rates of severance payments based on the period between the age of an employee on leaving employment and his/her compulsory retirement age.

Employees have, however, regularly challenged compulsory retirement ages, alleging that it is discriminatory on the ground of age to oblige an employee to retire at a certain age. 

Approach of the Equality Tribunal

The uncertainty surrounding this area of law is as a result of the fact that the EE Acts are inconsistent with the provisions of the Framework Directive 2000/78/EC (the “Directive”). In particular, Article 6 of the Directive states that any differences in treatment on the ground of age must be objectively and reasonably justified.  

Therefore, although there is no requirement to justify retirement ages under the EE Acts, following the High Court decision in Donnellan v Minister for Justice, Equality and Law Reform [2008], the Equality Tribunal has interpreted the EE Acts in line with Article 6 of the Directive and the jurisprudence of the Court of Justice, particularly where the employer is a state body.

In cases which have come before it, the Equality Tribunal has required an employer to demonstrate that a compulsory retirement age is objectively and reasonably justified by a legitimate aim of the employer, and that the means of achieving that aim are proportionate and necessary. This has made it difficult for employers to enforce compulsory retirement ages.  

Hospira – A Potential Departure?

Hospira v Roper and others (2013) appeared to represent a departure from the approach of the Equality Tribunal.  The Labour Court, in overturning the decision of the Equality Tribunal, held that employers are not required to objectively justify age discrimination.  While this case concerned severance payments it provides an insight into how a court or tribunal will interpret the exceptions under section 34 of the EE Acts, which covers both the fixing of a retirement age and different rates of severance payments based on age.

In the Hospira case, the Labour Court held that the legislature, in drafting the exceptions in section 34 of the EE Acts, considered it reasonably and objectively justifiable, within the meaning of Article 6 of the Directive, to provide for the exception in relation to severance payments.

Following Hospira it was unclear whether the reasoning of the Labour Court would have a broader effect on the exception under section 34 regarding compulsory retirement ages or whether it would be confined to age discrimination in relation to severance payments.

Approach of the Equality Tribunal Post Hospira

In Roche v Complete Bar Solutions (2013), the employer sought to impose a retirement age of 65 on Mr. Roche who was employed on behalf of various breweries to service equipment in licensed premises.  

In seeking to defend an allegation of age discrimination in the Equality Tribunal, the employer sought to rely on the reasoning of the Labour Court in Hospira and argued that there was no obligation on it to objectively justify its retirement age as the legislature had expressly provided for an exception in section 34 in relation to compulsory retirement ages.

The Equality Tribunal, distinguishing the facts of the case from the Hospira case, held that Hospira dealt only with age discrimination in relation to severance payments and that an employer must objectively justify compulsory retirement ages.

The employer in Roche succeeded in demonstrating that the retirement age of 65 was objectively justified. The Equality Tribunal accepted that evidence that, although not provided for in Mr. Roche’s contract of employment, the compulsory retirement age of 65 was custom and practice to create certainty and business planning and to encourage staff morale by using the available job created by retirement as an internal promotional opportunity.

In November 2014, the Equality Tribunal in Lett v Earagail Eisc Teoranta, firmly reiterated that it was its practice to interpret the exceptions in the EE Acts “in a harmonious way” with Article 6 of the Directive, and that Earagail Eisc Teoranta,even as a private actor”, was required to objectively justify its compulsory retirement age. 

In Lett, the employer sought to rely on a number of objective justifications that had previously been accepted by the Equality Tribunal in other decisions.  As in Roche, the employer argued that a retirement age was needed for “workforce planning” and to ensure job opportunities amongst younger employees.  In rejecting that this was a legitimate aim of the employer in Lett, the Equality Tribunal noted that no efforts had been made to fill the vacancy internally and in fact, Mr. Lett had never been replaced. 

Compulsory Retirement Ages - Current Position

It is clear from recent decisions of the Equality Tribunal that the Labour Court decision of Hospira did not, as commentators and practitioners speculated, represent a departure from the established approach of the Equality Tribunal to compulsory retirement ages. 

The law as it stands obliges employers to demonstrate that a compulsory retirement age is objectively and reasonably justified by a legitimate aim. 

The Equality Tribunal has accepted a number of legitimate aims put forward by employers to objectively justifying compulsory retirement ages.  Such legitimate aims include the physical demands and requirements of the role, the protection of the health and safety of employees and the promotion of access to employment for younger employees.  Nevertheless, it is also clear from Lett that identifying legitimate aims of a business it not simply a “tick-the-box” exercise and that the Equality Tribunal will require evidence specific to the role and the business in question to support an employer’s assertions.

In order to place themselves in a position to be able to objectively justify a compulsory retirement age, employers are advised to have a clear retirement policy in place which is applied consistently to all employees.  An employee’s compulsory retirement age should also be stated in the contract of employment. When the employee is approaching retirement age they should be consulted with so that they are at all times aware of the employer’s retirement policy and the retirement age which applies to their employment. Employers should also try to ensure that they are in a position to objectively justify a compulsory retirement age if required to do so by the Equality Tribunal.  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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