Spotlight: Retirement in the Workplace – An Update Following a Recent Supreme Court Decision

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Introduction

Mandatory retirement policies, which compel employees to retire at a specific age, have long been contentious in Irish employment law. These policies intersect with age discrimination protections under Irish law, leading to ongoing legal scrutiny. Recent case law from 2023 to 2024 has further clarified the legal landscape, emphasizing the need for employers to rigorously justify these policies.

The Employment Equality Act 1998 prohibits discrimination on the grounds of age. However, Section 34(4) states that it shall not constitute discrimination on the grounds of age for the retirement of employees if:

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

Recent judicial interpretations have refined what constitutes a legitimate aim and appropriate means in the context of mandatory retirement.

In the first instance employers are advised to follow the Code of Practice on Longer Working, published in 2017, which offers guidance on acceptable legitimate aims for justifying mandatory retirement age policies. These legitimate aims may include:

  • Intergenerational fairness
  • Motivation and dynamism through increased prospect of promotion
  • Health and safety factors
  • Ensuring a balance of ages in the workforce
  • Personal and professional dignity
  • Succession planning

Recent Case Law

Thomas Doolin v Eir Business Eircom Limited (2023) ADJ-00045261

Thomas Doolin, was in a low skilled IT support role, in a non-strategic department, which accounted for less than 15% of the workforce.   The other 85% were field operatives. Mr. Doolin was informed he would have to retire upon turning 65 on 1 July 2023, in line with the Company retirement policy.

When the matter came before the WRC, Mr. Doolin simply argued the decision was unfair, citing his strong job performance.

The employer sought to justified the retirement policy on grounds of intergenerational fairness, succession planning, health and safety, and maintaining an age balance.

The Adjudication Officer stated that he had to consider if the mandatory retirement age of 65 was objectively and reasonably justified by achieving a legitimate aim.  In doing so, he looked at the legitimate aim in light of the specific role of the employee.  The Adjudicator determined as follows:

  • Imposition of retirement age should be individually assessed on a case-by-case basis. The lack of individual assessment, was deemed to be contrary to the decision in Donnellan v Minister for Justice, Equality and Law Reform [2008] IEHC 467, which requires case-by-case assessment in the case of retirement.
  • Due to its low skilled nature, Mr. Doolin’s role did not impact career progression or succession planning within the business.
  • Whilst it recognised Health and safety concerns of the majority of field-based employees these concerns were not applicable to Mr. Doolin’s desk-based role.

The WRC held that the mandatory retirement was not objectively justified and reinstated Doolin. The employer subsequently appealed the decision.  The matter then settled and the appeal was withdrawn.

An Employee v Daughters of Charity Child and Family Service (2024) ADJ-00045740

The employee was forced to retire at age 66 in accordance with the Company’s retirement policy. Similar to the previous case, they sought an extension of their contract, claiming it was refused without any objective grounds. The employee appealed this decision, which was upheld on the basis that her retirement was in line with the state pension age. The employee specifically noted that other workers within the Company had worked beyond the age of 66.

The Company sought to objectively and reasonably justify the retirement, citing legitimate aims such as intergenerational fairness, increasing staff motivation through a promotion structure, and maintaining a balanced age structure. However, these justifications were not publicised until after the employee’s request to remain employed. Additionally, there was no precedent for employees in her role to work past the retirement age, and the Company could distinguish those employees who had. They also produced evidence showing they had lost valued employees due to a lack of promotional opportunities into the employee’s role.

The Adjudication Officer noted that at the time of the employee’s application to extend employment by another year, the employer had not yet publicised their legitimate aims. However, evidence produced by the employee showed that prior to the employee’s request, the Company was already taking measures to retain staff with potential for promotion into the employee’s role and had made exceptions to the retirement policy for employees in non-promotional or temporary roles. For these reasons, the WRC found that the employer had not discriminated against the employee on the grounds of age.

Retirement in 2023

Throughout 2023, the WRC endorsed the Donnellan decision, emphasizing the necessity for objective and reasonable justification of mandatory retirements to achieve a legitimate aim, with a focus on the need for such aims to be individually assessed. This issue was further scrutinized by the Supreme Court in the case of Mr. Mallon. Mr. Mallon was granted a leapfrog appeal to the Supreme Court, allowing him to appeal a decision of the High Court. The following questions, relevant to the case, were identified as having general public importance:

  • Is a national measure, such as imposing a statutory retirement age of 70 for sheriffs, compatible with the Equality Framework Directive?
  • Can mandatory limits be set for defined groups based on general probabilities of age, health, and competence, as opposed to an individualized assessment of individual characteristics?

Seamus Mallon v The Minister for Justice, Ireland, and the Attorney General

Seamus Mallon, a sheriff and solicitor, challenged the mandatory retirement age of 70 for sheriffs under Section 12(6)(b) of the Court Officers Act 1945.  He argued it was incompatible with the Employment Equality Directive (Directive 2000/78/EC) (which was transposed into Irish law by the Employment Equality Acts) and discriminated against sheriffs.

The Supreme Court upheld the High Court’s decision, stating that legitimate aims such as planning, age balance, intergenerational fairness, and dignity were necessary and appropriate.  Critically, the Court clarified that individual assessments are not required if legitimate aims are objectively justifiable.

Mr. Mallon’s Argument

Mr. Mallon relied on the 2008 case of Donnellan v. Minister for Justice, Equality and Law Reform & Ors, [2008] IEHC 467, which addressed the retirement age of senior Garda officers.  In Donnellan, McKechnie J expressed that using age as a proxy might be proportional when a large number of people are involved and individual testing is impractical.  Conversely, when assessing a few individuals is feasible, blanket age proxies would not be proportionate.

The Supreme Court clarified that as long as employers have legitimate justifications and appropriate measures for imposing a mandatory retirement age, they are not required to perform individual assessments. The notion that case-by-case assessments are necessary, as suggested in Donnellan, is not supported by post-Donnellan CJEU jurisprudence.  Individual assessment is not mandated by the Directive.

Does Section 12(6)(b) have a “legitimate aim”?

The State argued that Section 12(6)(b) allows for individual and organisational planning, age balance, intergenerational fairness, and the maintenance of personal and professional dignity. The Supreme Court agreed that these principles constitute legitimate aims.

Is Section 12(6)(b) “necessary and appropriate”?

Mr. Mallon argued that the mandatory retirement age of 70 for sheriffs is discriminatory and too low, especially compared to the retirement age of 72 for coroners.  He contended that any statutory retirement age for sheriffs must be objectively justifiable and, if no relevant justification is provided, there should be no mandatory retirement age, necessitating individual assessments.

The Supreme Court noted that the retirement age of 70 is significantly higher than the current pensionable age of 66. It was satisfied that the State’s aims were appropriate and necessary. The mandatory retirement rule did not violate the prohibition on age discrimination under the Directive, even without individual assessments.

EMPLOYER SPOTLIGHT

Over the past 18 months, numerous decisions have provided guidance for employers regarding mandatory retirement policies:

  • Contractual Retirement Age: Employers must have a contractual retirement policy to terminate employment on the grounds that an individual has reached retirement age.
  • Objective and Reasonable Justification of Legitimate Aims: Employers must clearly articulate the aim of mandatory retirement, ensuring that these aims are relevant to their workforce and not merely generalized. A thorough analysis of employee roles is required. Note that one legitimate aim is sufficient.
  • Code of Practice on Longer Working: While not prescriptive, recent case law indicates that failure to implement this code could undermine an employer’s defence.
  • Individual Assessment: Following the Mallon decision, individual assessments are necessary only when an employer’s aims for mandatory retirement are objectively and reasonably justified.
  • Post-Retirement Fixed-Term Contracts: Offering fixed-term contracts post-retirement can help avoid successful discrimination claims on the grounds of age. However, this may set a precedent for extending all employee contracts beyond the mandatory retirement age.

To ensure compliance and fairness regarding retirement, employers should:

  • Include a retirement age clause in employment contracts and company handbooks.
  • Engage early with employees approaching retirement age.
  • Clearly articulate legitimate aims for mandatory retirement, such as intergenerational fairness and health and safety.
  • Provide evidence supporting the rationale behind mandatory retirement, demonstrating that these aims are actively pursued.
  • Maintain transparent and clear communication regarding retirement processes.
  • Allow employees the opportunity to apply to continue working if they wish to do so.

INCOMING CHANGES

In March 2024, the General Scheme of the Employment (Restriction of Certain Mandatory Retirement Ages) Bill 2024 was published. This Bill proposes prohibiting employers from setting a retirement age below 66 without employee consent. Employees wishing to continue working must notify their employer in writing at least three months prior to the contractual retirement date. This scheme will not affect the Employment Equality Acts, and age discrimination claims may still be brought under these Acts.

This article was co-written by Don McGann (Partner), Robin Hyde (Partner) and Gloria Malandra (Pre-Trainee)

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