Mandatory Retirement Age - Your Questions Answered

In this First Tuesday Q&A, Fiona Sharkey, solicitor in the Employment Practice Group at A&L Goodbody, considers the law in relation to mandatory retirement age of employees in light of a recent decision of the Labour Court, Pat O'Donnell v Denis O'Keeffe (ADJ-00026978), where the Court found a mandatory retirement age to be justifiable.

What does the legislation say about mandatory retirement?

The Employment Equality Acts (the Acts) provide protections for employees against discrimination by employers on the basis of nine protected grounds, one being age. Specifically, the legislation provides that discrimination occurs when a person is treated "less favourably than another person is, has been or would be treated in a comparable situation" because of their age. Further, the Acts provide for an exemption whereby it does not constitute age discrimination for an employer to set a retirement age for its staff if:

1. it is objectively and reasonably justified by a legitimate aim; and
2. the means of achieving that aim are proportionate and necessary.

What happened in the decision Pat O'Donnell v Denis O'Keeffe?

Pat O'Donnell worked as a Construction Plant Fitter and was employed by the Respondent for 31 years. Prior to reaching the age of 65 the complainant wrote to the HR Department requesting to work for an additional 12 months until the age of 66 in order to reach the statutory retirement age. His request was denied, and his employment was terminated on 21 January 2020 when he reached age 65. He proceeded to lodge a claim of discrimination on grounds of age under the Acts in the WRC in February 2020 against the respondent. The WRC did not find in favour of the complainant, and he appealed the decision to the Labour Court earlier this year.

In the WRC, the complainant submitted that in denying his request to work beyond his 65th birthday, the HR manager relied on a policy "stating a mandatory retirement age". The complainant submitted there was no such company policy in place and that there was no retirement clause in his contract of employment. He argued that it was custom and practice to allow workers to work beyond age 65 if they wish. The respondent submitted that it was always practice that service engineers retire at age 65 and that his request to extend his employment beyond that highlighted his knowledge of this policy.

In the Labour Court, the complainant argued that he had no health concerns and was fit to remain in his employment. He also submitted that at the date of his retirement there was no qualified service engineer available to replace him. The Union, on his behalf, submitted that other employees had been retained past the age of 65 and that his contract of employment referred to a 'normal retirement age' and not a 'mandatory retirement age'.

The respondent argued there was an implied term in the complainant's contract that the retirement age was mandatory. The respondent provided evidence before the Court that it was the company’s established practice, which was consistently applied, that all service engineers retired on or before their 65th birthday. It was conceded that a former service engineer was retained past his 65th birthday but that this was in an administrative role which he had transferred into some years before reaching 65.

The respondent's defence relied on the safety critical elements of a service engineer role and that substantial training and investment into apprentices is carried out. The respondent argued that the mandatory retirement age was objectively justifiable for succession planning as they would plan to have apprentices trained to step into the retiring employee’s role.

What did the Labour Court decide?

The Labour Court was required to determine first, if there was a 'mandatory retirement age' rather than a 'normal retirement age' applicable to the complainant’s employment and if there was, did it fall under the exception in the Acts. While the Acts prohibit discrimination on the basis of age, it states that fixing ages for retirement is not contrary to the Act if it is objectively and reasonably justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.

The respondent submitted that this case was a "mirror image" of the case in Irish Ferries v McDermott, where the complainant, a docker, in challenging the imposition of a retirement age of 65 argued that he was in good health and capable of discharging his duties. In its decision, the Labour Court stated: "the maximum working age of 65 ensures that employees are not exposed to embarrassment of finding themselves incapable of discharging their duties and being retired in that context rather than in dignity and respect".

The Labour Court accordingly held that the company had established good grounds that objectively justify the selection of a retirement age of 65 years of age in respect of an employee employed as a docker within the company. The fact that there was no retirement clause in the complainant's contract of employment is interesting in this case.

The respondent pointed to the fact that this practice was reflected in the company handbook which was given to the complainant on a number of occasions and the adjudication officer accepted this. In not upholding the complainant’s appeal, the Labour Court determined that the mandatory retirement age enforced by the respondent was not contrary to the Act as it was reasonable, proportionate, and appropriate to achieve the legitimate aim of the company and therefore was objectively justified. The Labour Court held that the legitimate aim in this case is to "ensure a through flow of appropriately qualified service engineers and to ensure that employees are not required to continue working until they are unable to perform the duties."

What are the key takeaways for employers?

This Labour Court decision demonstrates that an employer can, in certain circumstances, seek to rely on a mandatory retirement age where it has a legitimate aim and is consistently applied. Note that the exception will be scrutinized carefully by an adjudication officer. In another recent decision of the WRC, A Senior Staff Nurse v A Nursing Home (In liquidation) (ADJ-00027325), the adjudication officer found that the complainant nurse was discriminated against as the only basis for her retirement was her date of birth. It was held that the respondent employer failed to discharge their duty to provide a rationale to show that compulsory retirement was objectively and reasonably justified by a legitimate aim and was appropriate and necessary to achieve that aim.

Employers who wish to operate a mandatory retirement age should ensure that the mandatory retirement age is widely available, well known to staff and is applied consistently. Ideally, employers should incorporate a mandatory retirement age in each employee's contract of employment and have a detailed policy widely available to staff which illustrates the retirement age with the reasons as to why it is in place