Compulsory Retirement - A Bygone Concept?

Author:Arthur Cox's Employment Law Practice and Arthur Cox's Pensions Practice
Profession:Arthur Cox
 
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In January 2014 the State pension age will increase from age 65 to age 66. The State pension age will thereafter increase to 67 years from 2021 and to 68 years in 2028. It is very likely that the increase in the State pension age from 65 to 66 in 2014 will result in requests from employees to work beyond age 65, which for the vast majority of employers, has traditionally been employees' normal retirement age. In this update, we look at the current state of the law in the area of compulsory retirement and the very real issues, from an employment and pensions perspective, that will arise when the changes in the State pension age take effect. Retirement at 65? Currently, there is no general compulsory retirement age in Ireland. For those working in the public sector, certain statutory retirement ages may apply. For all other employees, the Employment Equality Acts 1998 to 2011 (the "Employment Equality Acts") afford employers a broad discretion in fixing compulsory retirement ages. Compulsory retirement ages typically exist as an express term of an employee's contract of employment. However, they can also arise as an implied term and/or by custom and practice. It is important to note that an employee's contractual retirement age may differ to the retirement age in the pension scheme of which he/she is member. In order to defend a compulsory retirement age discrimination claim, an employer must establish that a normal retirement age does in fact exist within its organisation and that the employee was aware or ought to have been aware of its existence. Historic Irish position Up until relatively recently, the accepted legal position in Ireland was that if an employee's contract of employment contained an express retirement age clause, the employer could compulsorily retire the employee on attaining the specified retirement age. If the employee subsequently brought a claim of age discrimination, the employer could safely rely on Section 34(4) of the Employment Equality Acts as an absolute defence to such a claim. Section 34(4) provides as follows: "It shall not constitute discrimination on the age ground to fix different ages for the retirement (whether voluntarily or compulsorily) of employees or any class or description of employees" However, as is highlighted below, recent case law from the Equality Tribunal makes clear that employers can no longer rely on the Section 34(4) defence alone, and must now be able to objectively justify compulsory retirement. Failure to do so will inevitably result in...

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