With much discussion in the media, in the courts and among employers in recent times, in this article we look at the current situation regarding enforcing a compulsory retirement age.
State Pension Age
Since January 1, 2014 the age at which a person is entitled to a State Pension is 66 years. This will increase to 67 by 2021 and 68 by 2028.
Retirement Age from employment
The retirement age for an employee may be specified in their contract of employment or if it is not explicitly specified may be implied from custom and practice in the company or collective agreements applying to their employment.
Very often the retirement age was specified at 65 years which was in line with the age for eligibility for the State Pension.
As this has increased to 66 years of age currently, the employee is faced with a year when they have an income gap (between the age of retirement at 65, and the state pension age at 66). The employer may then be faced with a request from the employee (aged 65) to extend their contract for another year (until they reach 66 years) and this raises question about the nature of such a contract.
The employer when addressing the question needs to be mindful of The Employment Equality Acts and the European Court of Justice ruling which is that compulsory retirement age, in general, is prima facie discriminatory, unless objectively justified.
Objective Grounds for Retirement Age
There is no checklist that is universally applicable as to what are objectively justifiable reasons for a compulsory retirement age but case law provides guidelines and examples of acceptable objective justification.
The Equality Tribunal case of Paul Doyle v ESB International (Dec-E 2012-086) provides the following guidelines in respect of enforcing a compulsory retirement age:
- Does the compulsory retirement age seek to achieve a legitimate aim?
- Is the aim legitimate in the particular circumstances of the business?
- Are the means of achievement in the aim proportionate?
Examples of acceptable objective justifications are:
- To create opportunities in the labour market
- To enable a balanced age structure in the workforce
- To encourage motivation and dynamism through the prospects of career enhancement and promotion
- To ensure the health and safety of employees
The above indicates that the law has regard for all of the circumstances of a particular case in arriving at its decision on whether a compulsory retirement is justifiable.
In addition, the custom and practice of the organisation, the pension arrangements, the contracts of employment and the collective agreements of the organisation would also be considered.
Another interesting case is that of a pilot who was retired from Lufthansa on reaching his 65th birthday and who took a case to the Court of Justice of Europe. Read more about the case here.
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