The phrase that “age is merely a mindset” seems to be growing in relevance as today’s aging workforce becomes more eager to work beyond the traditional retirement age of 65. Retirement based age discrimination has had a surprise resurgence in recent years with the introduction of the Equality (Miscellaneous) Act 2015, which has brought Irish Law formally in line with the EU Framework Directive 2000/78/EC. Now employers are required to justify when an employee is mandatorily retired. Yet for quite some time, it casted a cloud of confusion as to what exactly constituted such. To assist, the WRC published a Code of Practice in 2017 called the Industrial Relations Act 1990 [Code of Practice on No Longer Working] (Declaration) Order 2017 (hereafter referred to as “The Code”). Following the outcry of the Citizens Assembly to bring an end to retirement clauses in Ireland, the Code reintroduced a more pro-employee outlook when it comes to retirement, providing non-binding steps for employers on how to approach those reaching the same. Following last year’s publication by the Irish Human Rights and Equality Commission, employers have been given some direction as to what constitutes an objective justification when including a mandatory retirement clause and how using fixed term contracts limits their exposure to spurious age discrimination claims whilst striving to ensure that older workers equality rights are respected. Furthermore, following the enactment of the Public Service Superannuation (Age of Retirement) Bill 2018, retirement age for the public sector was raised to 70, highlighting the legislatures acceptance of an ever-aging workforce.
Under both the Framework Directive and the Employment Equality Acts 1998- 2018 both direct and indirect age discrimination are prohibited under section 6 (2) (f), which outlines that any difference in treatment between employees by virtue of their age, as in this instance with a mandatory retirement clause, will constitute discrimination. Interestingly, out of nine grounds of discrimination, age discrimination is the only ground which direct discrimination can be justified. This was originally provided for under Article 6 of the Framework Directive and now in Ireland under the Miscellaneous Act 2015, whereby employers can now treat employees differently with a retirement clause when same is:
- “Reasonably and Objectively” justified by a legitimate aim and then;
- The legitimate aim must go no further than necessarily required to achieve that aim.
In Ireland, custom and practice has dictated 65 as being the normal age for employees to retire. Importantly for the employer, a retirement clause can be either express or implied within the employee’s contract of employment, as held inEaragail Eisc Teo v Richard Lett (DEC-E2014-076). The employer’s retirement age was included in the company handbook; however, the Equality Tribunal found that Mr. Lett did not receive a copy of the company handbook as part of his contract. This was sufficient to establish a prima facie case of discrimination, which the employer was unsuccessful in attempting to rebut.
Whether retirement was express or implied, the Court have drawn a distinction between termination of employment by way of retirement and dismissal on grounds of age. To avoid the latter, best practice requires that an employer include an express provision outlining the retirement age either in the contract of employment or within the company handbook, which in turn fixes the employee with knowledge of the retirement age. If contained within the handbook, a copy of such must be furnished to the employee, who then must sign and provide a receipt of the same. At all times, the employer must take positive steps to ensure their employees are aware as to the existence of this fixed retirement clause.
If no express term exists, a retirement age can alternatively be implied in accordance with either statute, companies custom and practice, or by a collective agreement, to be deemed as a condition of employment. Again, the employers must err on the side of caution in this regard and ensure that the employee is aware and fully informed as to its existence. If no implied or express term exists, any termination of employment will therefore amount to an unfair dismissal and an employee will be in a position of strength to contest the fact that they are not subject to any retirement clause and should therefore be allowed to continue their employment.
In addition, if there is no express term, employers have often relied on the employee’s occupational pension scheme to establish whether they had notice that he/she was to be retired. Although it provides a useful guidance tool and at times a safety net for employers who have failed to account for a provision of retirement, it poses an unpredictable threat for employers, most particularly with the changes taking place to the pensionable age in Ireland over the forthcoming years.
The importance of ensuring that such a term has be properly incorporated can be seen in the Connacht Airport Development Limited T/A Ireland West Airport Knock and John Glavey  28 E.L.R. 204. Here, Mr. Glavey worked as a bartender since 1991 and had no mandatory retirement clause in his contract. When Mr. Glavey was retired at 65, the employer argued that there was an implied term that 65 was the universal retirement age amongst all employees. Despite the employer’s efforts to infer such, the Labour Court found in favour of Mr. Glavey and held the employer had not fixed a mandatory retirement age, rendering the employees retirement as a dismissal on the grounds of age. Importantly, the court highlighted the employer’s failure to produce documentation that put the employee on notice as to the existence of any mandatory retirement clause.
Objective Justification of a Mandatory Retirement Clause
Once a retirement clause has been formally incorporated, an employer then places themselves in a position to objectively justify the same. Under the Framework Directive and the Employment Equality Acts, the Court of Justice of the EU have developed a non-exhaustive list as to what amounts to objective justification, which member states can rely upon, so as not to constitute discrimination under Article 6(1) of the Employment Equality Directive, allowing employers to treat employees differently based on age:
- preserving the operational capacity of the armed forces, police, prison or emergency services;
- promoting the vocational integration of unemployed older workers;
- encouraging recruitment;
- sharing employment between the generations;
- establishing a balanced age structure within a particular employment;
- workforce planning;
- avoiding disputes concerning employees’ fitness to work;
- the protection of health and safety;
- promoting the access of young people to professions;
- ensuring the best possible allocation of positions between the generations within a given profession.
Although seemingly straightforward, it is not simply enough to identify one of the grounds above when including a mandatory retirement clause so as to escape a potential claim therein. The justification needs to amount to a legitimate employment policy. In O’Mahony v Southwest Docks on Call Ltd DEC – E2014-031 here the Court held that the Respondent failed to offer legitimate health and safety grounds that prevented the Complainant from working past the age of 65 and found in favour of the Complainant, therefore deemed his retirement discriminatory in its effect.
To establish a legitimate employment policy, the employer must be able to provide concrete evidence to show a direct link between the objective justification and the legitimate aim. A successful application of this can be seen in Transdev Light Rail Limited v Michael Chrzonowski (DEC- E2016-070). Here a Luas train driver was required to retire at 65, despite wishing to remain employed. After being refused such, despite no expressed retirement clause, the employer argued it allowed for better access to employment by means of distribution of work between generations to ensure a more efficient workforce and was able to provide documentation that showed they began recruiting 8 months prior to allow sufficient training period for all new recruits deemed the objective justification to be rationally connected to the legitimate aim. The Court held the employer reasonably and objectively justified the inclusion of a mandatory retirement age.
Protecting the Employer: A Procedural Outline & the Code of Practice
The Code outlines that in addition to ensuring that a retirement clause has been sufficiently included within an employee’s contract, that an employer should adopt the following procedure for when an employee is approaching retirement to ensure clarity for both sides:
- Notify the employee of their retirement in writing 6 months prior to their date of retirement;
- Allow reasonable time for planning, advice and succession for the employee;
- Employer should arrange a face to face meeting following written notice to ensure;
- A clear understanding of the intended retirement date and the potential issues that may occur therein;
- Explore measures to support the employee in retiring;
- Discuss any potential for transitional arrangements regarding a post that may be available for the employee;
- Employer should be supportive when providing guidance and information throughout the entire process.
- Importantly all requests to work beyond the retirement age, regardless of whether there is a retirement clause or not, the employer should still give it the deserved consideration and take the following into account; option for flexible working times, duration of a post working contract, occupational Pension Scheme and any potential contract of employment implications therein.
Post- Retirement Procedure
The Code recommends that employers adopt the following procedure when it comes to accommodating post retirement employment:
- The employer must provide a method of facilitation for the employee to make a request to continue employment no less than 3 months from the retirement date;
- After the request, an engagement meeting should follow between both parties. The purpose of this meeting is to allow the employee to submit a request to continue employment past his/her retirement date. It’s important for the employer in this instance to afford an employee requests proper consideration and to avoid a pre-determined mindset;
- The employer then must communicate their decision to the employee within a reasonable time after the engagement meeting. The Code recommends the sooner the decision is given, the better;
- If the employer refuses the employees request, the decision should be clearly set out to assist the employee to be able to understand the findings reached. By doing so, it provides the employee with some satisfaction knowing their initial request was facilitated and heard.
After this, the employer must facilitate a mode of recourse for the employee if the request is refused in accordance with fair procedure. Again, the Code recommends that this should be availed through the normal grievance procedure with the standard requirements applying therein i.e. right to representation.
- If the decision is taken to retain the employee, the employer should offer a fixed term contract to the retiring employee.
Importantly, this procedure should be clearly outlined in the company handbook and/or the employee’s contract of employment.
Fixed Term Contracts: Post Retirement Employees
Fixed Term Contracts is governed by the Protection of Employees (Fixed Term Workers) Act 2003 and Directive 1999/70/EC. The fixed term contract provides an immediate short-term solution for the employer until such a time the employee reaches a pensionable age, where an employee is more likely to accept their retirement due to their diminished expectation to work.
The reason fixed term contracts provide the necessary flexibility for employers in accommodating post retiree’s is that it permits an employer to provide a difference in conditions between employees. Meaning if an employer offers a fixed term contract, even though it is more limiting than the employee’s pre-retirement contract, it will not constitute discrimination. Moreover, it seems an employer can include another limiting provision that allows for a maximum of 2 successive fixed term contracts post retirement which seems not to be discriminatory, once objectively justified therein as confirmed in Gergiev v Technicheski Universitet- Sofia (Cases C-250/09 and C-268/09).
An Employee’s Perspective
The main question for an employee in this instance, is if they feel that they are being unjustly retired without sufficient cause, is whether they should pursue an equality claim or an unfair dismissal claim?
Under section 6 (2) (f) of the Employment Equality Acts 1998-2015, an employee may pursue a claim for age discrimination. As with any discrimination claim, unlike its unfair dismissal counterpart, an employee is entitled to 104 weeks renumeration without reference to the years of service or without the burdensome obligation to mitigate one’s loss. However, it seems awards pertaining to age discrimination are relatively low. Of course, this depends on a variety of circumstances as certain factors are taken into consideration when the WRC and/or Labour Court make such determinations. This includes, but is not limited to, blatant disregard for an employee’s right to employment, failure to account for their wishes to remain in employment, lack of inclusion of a retirement clause, directly discriminating by allowing others past the age of retirement to remain employed and absence of an objective justification. Significantly, any award under the Employment Equality Acts is not subject to taxation.
In A Bookkeeper v A Retail Business (ADJ -5391) the WRC recently awarded €12,500 to an employee as she was forced to retire in a small family business despite no contract of employment. The Adjudicator based its decision around the fact the employer was unable to objectively justify the employee’s retirement, especially given the administrative nature of the work involved. With O’Mahony DEC- E2014- 031 as discussed above, the court awarded the employee in that instance €12,000. However, last year the Workplace Relations Commission’s surprisingly issued a deterrent-like award of €50,000 to Valerie Cox against her former employer, RTE, who failed to justify the inclusion of a mandatory retirement age of 65 for a journalist and held the clause to be discriminatory in its effect.
It will be interesting to see over the next few years how the role of the ever-changing state pension age will play in determination of any potential award. If for example, an employee is mandatorily retired at 65 despite not being able to receive their pension until they turn 66, any award therein could potentially bridge the shortfall in earnings an employee may suffer as a result. With this set to increase to 68 over the forthcoming years, when offset against the ever-diminishing retirement age of 65, this will understandably cause considerable problems for employers in the future, potentially leading to a significant rise in awards therein.
Going forward, the employer needs to avoid falling into the predictable trap of over reliance on a so-called traditional retirement age that seems to no longer be as relevant as it once was in Ireland. It seems an employer should ward off the presumption that an employee is waiting to retire and to error on the side of procedure when their employee is approaching retirement and to provide a clear retirement process for them to follow, so as to avert indignation amongst the workers.