Retirement Dismissals – HR ConsiderationsPosted in : HR Updates ROI on 17 August 2020 Issues covered: Retirement Age; Discrimination and Equality; Retirement Dismissal
Retirement continues to be a significant employment issue due to the ongoing economic changes in relation to the increase of the state pension age to 66, and the impending further proposed increases to 67 and 68 in 2021 and 2028 respectively. The issue of retirement is one which comes up regularly for employers and has attracted much recent attention due to case law.
The Employment Equality Acts 1998-2015 prohibit discrimination in employment on a number of grounds, including age. The Acts only apply to persons above the maximum age at which a person is statutorily obliged to attend school (16 currently). Article 6 of Council Directive 2000/78/EC (“the Directive”) provides that Member States may provide that differences in treatment on the grounds of age shall not constitute discrimination, provided that the difference may be objectively and reasonably justified by a legitimate aim, and the means of achieving that aim are appropriate and necessary.
Retirement Age v Pension Age?
There is no legislative single fixed mandatory retirement age for employees in Ireland. An employee’s contractual retirement age is an entirely separate issue to the age at which employees are entitled to draw down their state pension. An employer is lawfully entitled to set individual retirement ages in the contract of employment. An employer is also permitted to retire an employee on reaching a set retirement age if this age is clearly outlined in the contract of employment and can be objectively justified.
Your company retirement age should be set out in the contract of employment. Your retirement age can correlate to the state retirement age (currently 66) or the retirement age specified in any pension scheme, if in place. There is a retirement age set by law for some public servants. Firefighters and Gardai for example have earlier retirement ages.
The Equality (Miscellaneous Provisions) Act 2015 provides that an employer must objectively justify the mandatory retirement age. The retirement age you set needs “to achieve a legitimate aim” and the means of achieving the aim should be both appropriate and necessary. Some examples of objectively justified reasons:
- To create opportunities in the labour market
- Health and safety concerns for the public and employees
- Encouraging recruitment and promotion of younger people
- Motivation through the increased prospect of promotion
- Preserving the dignity of older workers
- Intergenerational fairness
The following case is important to show you the thinking on how to do the same. In Saunders v CHC Ireland Limited 2011, the Equality Tribunal was asked to consider whether the employer’s retirement age of 55 was discriminatory.
The complainant was a winchman which is a safety-critical, physically demanding occupation. The objective aim put forward by the employer was:
I. the protection of the health and safety of both the winchmen and the civilians requiring rescue;
II. the proper operational functioning of the employer’s search and rescue service.
The Equality Officer was satisfied that the Company had established a legitimate aim. The Equality Officer next considered whether the imposition of a retirement age of 55 was a necessary way of achieving this aim. In light of the published research that a person’s physical endurance, musculature and respiratory capacity decrease with age, the Equality Officer determined that the retirement age of 55 was objectively justified.
Your Paper Trail
If you are setting a retirement age it should be objectively justified as explained above. You should have prepared a careful paper trail showing why this chosen age, for example 66, is objectively justified. This should be reflected in a policy within your Company Handbook or policies and procedures document so that all team members know about it.
Once the above is done you should write to the employee approximately 12 months before their retirement age informing them of their upcoming retirement. This is important so as not to surprise the employee. Once the employee is within 6 months of the planned retirement you should meet to discuss arrangements for retirement including: the date of retirement, anything to help the transition for the employee, handover plans and any other details. It is vital you ensure this meeting is followed up in writing for clarification purposes.
Fixed Term Contract After Retirement
If you receive a request from one of your employees to work beyond their retirement age you need to consider the precedent you are setting. Most importantly you need to consider the need to ensure business requirements are met. If you chose to offer your employee a fixed term contract i.e. a contract with a start date and end date you must objectively justify it as explained above for its own purposes. For example the business needs a fixed term contract from this date to this date because of what business reason? It is simply not enough to say the contract is for a year and then ends. It must have a business reason attached and explained. Make sure you have a paper trail – remember if it’s not in writing it didn’t happen!
The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.