The huge deficit in both public and private sector pension schemes means that it is now a reality that many people will have to work beyond the age of 65, the traditional age of retirement in Ireland, in order to avoid the poverty line. Also with the changes to the Irish State Pension Age, announced today, retirement age now may be set at 68.
Surprising, there are still a number of employees who do not have their retirement age set out in their Contract of Employment. Is this true of your employees? If yes then you should be aware if there is no expressed contractual retirement age, there is a strong argument that any attempt to randomly retire an employee would be deemed discriminatory on grounds of age. If a successful claim is brought by the employee he/she would be entitled to receive an award of up to two years gross remuneration.
The legal framework
The Employment Equality Act 1998 was amended by the Equality Act 2004 to prohibit discrimination on the grounds of age for everyone above 16. However employers are still allowed to set minimum recruitment ages of 18 or under and to set retirement ages in employment contracts.
There is also a general exemption for different treatment on any of the nine grounds of discrimination in the Acts due to a “genuine occupational requirement”. In theory, this could arise where age limits are required because of the nature of the post or the conditions in which the job is performed.
However, following a number of decisions from the European Court of Justice (“ECJ”) in recent years, it can no longer be said that the setting of mandatory retirement ages in employment contracts is absolutely immune from challenge on the age ground.
In the 2007 case of Palacios de la Villa –v- Cortefiel Servicies SA, the European Court of Justice (“the ECJ”) held that compulsory retirement clauses set by law were discriminatory on grounds of age and could only be objectively justified in certain circumstances. The Irish High Court has approved the Palacios decision and the Irish Labour Court has indicated that the current position in Ireland may have to be revisited.
Impact on the Irish position
The Irish High Court applied the Palacios objective justification test in the 2008 case of Donnellan v Garda Commissioner and Minister for Justice . The Court found that an Assistant Garda Commissioner had been treated less favourably due to the compulsory retirement age of 60 for his rank but dismissed his claim on the basis that the State had satisfied the objective justification test. In that case, the State had argued that the lower retirement age was necessary to ensure that talented young people could move through Garda ranks.
The Irish Labour Court has also suggested that the current position under the Acts may not be compatible with the European Directive on which they are based. There is therefore a strong likelihood that the Acts will be challenged in the future. However, there have been two recent judgments from the ECJ in 2010 which may indicate a somewhat more pro-employer approach by the ECJ in relation to occupational age limits.
Employers should still tread very carefully before introducing or applying age limits in the workplace.
- Continue to provide for a retirement age in employment contracts.
- Where possible, document the objective reasons for selecting a certain retirement age. At a minimum, consider objective reasons to justify applying a compulsory retirement age in the workplace.
- Review any rules, policies or provisions that are directly related to age as these may become harder to justify in the future.