The issue of Retirement Ages has been a major talking point in HR Departments in recent times. Over the next 16 years the State Pension Age will have risen, in line with EU requirements, from 65 to 68. This throws up the issue of people perhaps being forced to retire before their pension is due to be paid, and so wishing to work on longer as a result.
The issue for the HR department becomes two-fold. Firstly what is the age to put in the Company Retirement policy, and secondly what to do with employees who wish to work on beyond their retirement age.
To answer the first query it is important to be aware that there is no mandatory age for retirement in Ireland. Currently where an employer has put a definitive retirement age in a contract of employment they are free to enforce this. However in light of a recent European Court of Justice case the Employment Appeals Tribunal (EAT) are now looking for objective justification for such an age. Objective Justification is an employer providing a valid reasoning as to why they are enforcing a retirement age at a specific time, i.e. why are they retiring at 66, and why not earlier or later?
There has been a significant increase in the number of claims before the EAT regarding retirement and in the current economic meltdown as mentioned above employees may no longer be able to afford to retire, possibly due to having had their entire pensions wiped out in the Economic Crisis.
the important cases relating to this are firstly the
Fuchs & Anr –v- Land Hessen ruling, where it was held that the retirement age breached the prohibition on age discrimination in the Equal Treatment Framework Directive, and the retirement age of 65 constituted a difference in treatment on the ground of age, it is now the case that an employer will need to be able to justify their retirement age.
In an Irish contact the
Saunders –v- CHC Ireland Limited ruling demonstrated that the Equality Officer addressed the issue of Objective Justification and found that before an employer can rely on a retirement age, it must satisfy the court that it is objectively and reasonably justified by a legitimate aim and that the means of achieving the aim are appropriate and necessary. The end result of this is that employers will now be asked
“What is the objective justification?” and
“Why do you have a compulsory retirement age?” if an employee was to take it to a tribunal.
On the second matter of employees wishing to work on beyond their retirement age, it is permissible for employees to be given fixed term contracts beyond their retirement age, however this encounters a number of issues for the employer;
- Employees on fixed term contracts are subject to rules regarding these, whereby an employee may not be given continuous fixed term contracts for more than four years without justification, so this limits the timeframe you can keep someone work past their retirement age.
- Fixed term workers are subject to the same conditions in respect of redundancy as permanent employees, so an employee whose fixed term contract expires could be entitled to redundancy payments (and potentially inclusive of their service up to that point) provided the criteria for redundancy is satisfied, such as the role no longer is exists and the employee is not being replaced.
- By allowing employees to continue on fixed term contracts it can cast doubt over the legitimacy of the Company's retirement policy and perhaps set a precedent for employees working beyond this age. in the Connaught Gold case that was before the EAT the employees were retired at 65 however in certain circumstances employees were permitted to stay beyond this point, and the employee taking the claim was not permitted to stay on. In this case the EAT held that it was unusual for the Company to allow employees to work beyond this point and held the retirement to be justified, however this was solely on the basis that the Company could show detail of the unusual circumstances which permitted the employees staying on.
There are merits to an employee working beyond the normal retirement age and in yesterday's
Irish Times there was a supplement regarding Active Ageing and the virtues of hiring workers who may be of a particular age. The decision to retire or keep people working will ultimately be up to each employer however it is important to be aware fo all the facts before making such a decision.
The issue of Retirement Ages has been a major talking point in HR Departments in recent times. Over the next 16 years the State Pension Age will have risen, in line with EU requirements, from 65 to 68. This throws up the issue of people perhaps being forced to retire before their pension is due to be paid, and so wishing to work on longer as a result.
The issue for the HR department becomes two-fold. Firstly what is the age to put in the Company Retirement policy, and secondly what to do with employees who wish to work on beyond their retirement age.
To answer the first query it is important to be aware that there is no mandatory age for retirement in Ireland. Currently where an employer has put a definitive retirement age in a contract of employment they are free to enforce this. However in light of a recent European Court of Justice case the Employment Appeals Tribunal (EAT) are now looking for objective justification for such an age. Objective Justification is an employer providing a valid reasoning as to why they are enforcing a retirement age at a specific time, i.e. why are they retiring at 66, and why not earlier or later?
There has been a significant increase in the number of claims before the EAT regarding retirement and in the current economic meltdown as mentioned above employees may no longer be able to afford to retire, possibly due to having had their entire pensions wiped out in the Economic Crisis.
the important cases relating to this are firstly the Fuchs & Anr –v- Land Hessen ruling, where it was held that the retirement age breached the prohibition on age discrimination in the Equal Treatment Framework Directive, and the retirement age of 65 constituted a difference in treatment on the ground of age, it is now the case that an employer will need to be able to justify their retirement age.
In an Irish contact the Saunders –v- CHC Ireland Limited ruling demonstrated that the Equality Officer addressed the issue of Objective Justification and found that before an employer can rely on a retirement age, it must satisfy the court that it is objectively and reasonably justified by a legitimate aim and that the means of achieving the aim are appropriate and necessary. The end result of this is that employers will now be asked “What is the objective justification?” and “Why do you have a compulsory retirement age?” if an employee was to take it to a tribunal.
On the second matter of employees wishing to work on beyond their retirement age, it is permissible for employees to be given fixed term contracts beyond their retirement age, however this encounters a number of issues for the employer;
