Employer Resources Newsletter - August 2021

The topic of retirement age is something that raises its head on a regular basis. Whether is the thorny issue of adequate pension provision or the gradual increasing of the State pension age, issues around retirement have been long debated. While many feel that the retirement age should not be extended beyond 65, there are people who want to work beyond 65 due to financial issues or simply that they believe they still have plenty to contribute as a member of the workforce.

Our Workplace Relations Commission case example this month, a claim involving an employee against his employer, an Irish homeless charity, highlights that there can be financial consequences for employers if they are deemed to “force” an employee to retire.

It is important to note that there is no compulsory retirement age for employees across Ireland. However, that isn’t to say that an Organisation cannot enforce retirement age if it can be justified and there is a solid business reason.

A mandatory retirement age can still be set out in an employee’s Statement of Terms and Conditions of Employment, or a retirement age can also be an implied term and/or be a matter of custom and practice within the Organisation.

Under the Employment Equality Acts 1998-2015 it is prohibited to show any unfavourable treatment to an employee based on any of the nine grounds, including age. However, Section 34(4) of the Act explicitly provides that fixing a required retirement age does not constitute age discrimination. But the Employment Equality Acts are inconsistent with the European Council Directive 2000/78 EC, which requires any differences in treatment on grounds of age to be objectively justified. Therefore, employers need to have strong, justified and objective reasoning for mandatory retirement within their Organisation whilst taking into consideration the Workplace Relations Code of Practice on Longer Working and guidelines established by the Irish Human Rights and Equality Commission Guidelines on Retirement and Fixed-Term Contracts.

Workplace Relations Code of Practice on Longer Working:

The WRC’s Code of Practice provides guidance to employers, employees and their representatives on the best practice in the run-up to retirement, including responding to requests to work beyond the retirement age. The Code of Practice requires that compulsory retirement ages must be ‘capable of objective justification both by the existence of a legitimate aim and evidence that the means of achieving that aim is appropriate and necessary’. This could include:

Intergenerational fairness (allowing younger workers to progress);
Motivation and dynamism through the increased prospect of promotion;
Health and Safety (relevant to more safety critical occupations);
Creation of a balanced age structure in the workforce;
Personal and professional dignity (avoiding capability issues with older employees); or
Succession planning.

Other measures suggested by the Code of Practice include;

Providing supports to aid the transition to retirement, e.g. pre-retirement courses, flexible or part-time working or counselling.
Providing accessible information on retirement procedures at work, both at induction and at regular occasions throughout an employee’s career.

Under the Code, good practice regarding impending retirement involves “an employer notifying an employee (in writing) of their intention to retire him/her on the contractual retirement date within 6-12 months of that date”.

Written notifications should be followed with a face-to-face meeting which addresses a number of areas. The Code of Practice also provides guidance for employers in terms of requests for longer working and what to consider in advance of granting or denying any such request.

The IHREC Guidelines on Retirement and Fixed-Term Contracts:

The Irish Human Rights and Equality Commission (IHREC) also issued guidelines on retirement and fixed term contracts, which should be read in conjunction with any relevant statutory code of practice including the Workplace Relations Commission’s Code of Practice on Longer Working.

The purpose of the guidelines is to provide guidance to legal professionals, HR professionals, trade unions, employers and others in relation to the interpretation and application of section 6(3)(c) of the Employment Equality Acts which provides – Offering a fixed term contract to a person over the compulsory retirement age for that employment or to a particular class or description of employees.

Setting a mandatory Retirement Age

A “two-tier approach” is recommended when it comes to retirement within the workplace:

1. Is it covered in the contract (expressed or implied):

It is important to include an expressed mandatory retirement clause in contracts of employment.
The absence of an expressed clause is not necessarily fatal, as it might be an implied term i.e., by way of the pension scheme in place;
A mandatory retirement age may also be a well-known within the Organisation and could have easily been found out – does a custom and practice exist?

2. Is it objectively justified? For example:

Intergenerational fairness (allowing younger workers to progress);

Courts have accepted arguments from employers that a mandatory retirement age was necessary to encourage employees to stay with, and progress within an Organisation and to motivate employees by the prospect of being promoted into more senior roles.

Terminating the employment contracts of employees who have reached retirement age makes it easier for other workers to find work. This justification can be supported by national employment policies such as stimulating the labour market, reducing unemployment and vocational training objectives.

Creation of a balanced age structure in the workforce: Mandatory retirement ages when used to establish a balanced level of experience in an organisation has been found by courts to be objectively justified as it provides an organisation with a wider mix of skill and experience and allows for the recruitment of people with newer and differing skill sets and experience.

The protection of health & safety: Courts have found it justifiable to have mandatory retirement ages for employees who work as drivers, pilots and in jobs which are physically demanding.

However, not every working environment carries with it the same risks to health and safety. Therefore, an employer would need to be in a position to demonstrate by way of a hazard identification and risk analysis exercise that they have evaluated their particular work environment in setting a mandatory retirement age.

Succession planning: Employers need to plan for the future in order to ensure that they have the right people in place with the requisite skill sets and experience to support the activity of the Organisation at a future point in time. Mandatory retirement ages have been held to promote this aim by facilitating the retirement of older employees in order to opens up opportunities for younger employees who may have differing skill sets and experience.

Conclusion

It is still best practice to specify a retirement age in contracts of employment so as to ensure that a compulsory retirement age forms a part of the employee’s terms and conditions. It is important for the Organisation to be consistent in enforcing their retirement age to correspond with the contract. If an Organisation deviates from this contractual condition, it may set precedence for the future.

Irish charity ordered to pay €22,000 to 68-year-old for unlawfully retiring him.

Adjudicator found that the Complainant’s role with the Charity “was ended through unlawful and less favourable treatment because of his age”.

Background

The complainant worked for the respondent on a two-year fixed term contract. The complainant turned 66 during the period of the contract. His employment ended on the 20th June 2018, at the expiry of the fixed term. The respondent did not renew the fixed term contract, nor did it accept his application for the subsequently vacant role. The complainant asserts that this amounted to age discrimination. The respondent denies the claim of discrimination and states that it has a retirement age of 66 applicable to all staff.

Summary of Complainant’s Case

The complainant outlined that he was recruited by the respondent in 2016 to work on a new project involving family mediation to prevent young people entering homelessness. He was appointed to the role in 2016 and signed a two-year fixed term contract.

The complainant received a phone call from HR who mentioned that he would turn 65 during the contract and he would have to retire at this point. The complainant replied that he needed time to build up the project. He was informed the following day that he could work through to the end of the full two-year contract, i.e., beyond his 65th birthday.

The complainant said that the project was for five years and its funding from a named philanthropy group was dependent on achieving outcomes. In January 2018, the respondent published its second-year report on the project. This concluded that target for the year has been exceeded and ‘the mediation service has proven itself to be an effective process which is delivering effective change in the lives of young people and families referred to it.’

In February 2018, the respondent emailed all staff to say that the retirement age had been raised to 66. The complainant received a phone call that day to acknowledge he would turn 66 on the 23rd April 2018. The complainant outlined that his role was then advertised internally, and he applied for the role on the 11th April 2018. His was the only application. It was confirmed that his application was not processed. The complainant applied again as an external candidate and was told that he would not be considered because of his age. The complainant outlined that the respondent initially found no suitable person for the role, which meant that he was sitting there, qualified and not able to apply for it.

The complainant said that he sought to meet the HR Director but only received emails that the position had since been re-advertised and filled. The complainant commented that he had since been asked to mentor the two mediators on a voluntary basis and that they had met on four occasions. The complainant’s last day in work was the 20th June 2018.

The complainant outlined that in September 2018, the public body invited him to consult in a paid role for 20 to 40 hours per week. This role was to examine case load including the most complex cases. He outlined that there may be many agencies intervening with a family so there was a need for creative community alternatives to allow State bodies work together in their interventions. He said that they discovered that agencies worked in isolation. He said that, when seeking this role, no one has asked him about his age, but they did ask him about his knowledge.

The complainant outlined that, on taking the role with the respondent, he left a permanent job with a retirement age of 70. He commented that age should have been a positive and not a negative. The complainant said that he felt humiliated and hurt, in particular as this was a role he had dreamt about. He was not able to meet HR face to face.

Summary of Respondent’s Case

In submissions, the respondent rejected the complaint of discrimination in relation to access to employment. The respondent submitted that the complainant had been employed between the 21st June 2016 and the 20th June 2018, when the two-year contract ended. The complainant reached the retirement age of 66 in April 2018 and the respondent allowed for the contract to run until its expiry in June 2018.

On the 21st February 2018, the respondent wrote to the complainant and all other staff to say that the retirement age was to increase to 66. The complainant asked for an extension, and this was declined by the respondent. The respondent outlined that it would not consider his application for the role. The respondent outlined that it became aware of the complainant’s age during the Garda vetting process for the initial application.

Findings and Conclusions

The first issue to consider is whether the complainant’s employment was subject to a retirement age. While the contract of employment does not refer to a retirement age, the adjudicator finds as fact that it was age 66. In reaching this finding, the adjudicator notes the email of the 19th February 2018 that informs employees generally that the retirement age would increase to 66. He notes the case law that a retirement age can also be established through custom and practice or documents other than the contract of employment. The adjudicator concludes that the retirement age fixed by the respondent was 66.

The complainant’s two-year fixed term contract ended on the 20th June 2018. He proposed to the respondent that he be given a further two-year contract.

It transpired that during the initial Garda vetting process, the respondent became aware that the complainant was then approaching the then-retirement age of 65. This was the first occasion that the employer became aware of the employee’s age.

After being informed that he would not be offered a second fixed-term contract, the complainant applied for the role advertised by the respondent, in effect his role. The respondent did not consider the complainant’s application, while acknowledging his disappointment. The respondent later employed a younger person to replace the complainant.

The Directive and the Employment Equality Act permit differential treatment of employees according to their age, so long as it is “objectively and reasonably justified by a legitimate aim and the means of achieving that aim are appropriate and necessary”. The Code of Practice and other instruments were enacted to help employers and employees tackle the issue of longer working.

In this case, having reviewed the evidence and submissions, the adjudicator found that the aims relied on by the respondent, for example relating to fitness and dignity, were legitimate. However, the adjudicator finds that the means used to achieve these aims were not appropriate or necessary. It was not necessary to use the blunt indicia of age when fitness could have been readily assessed in other ways. The project, for example, was evaluated, and the line manager gave the complainant a glowing reference. This was also not a proxy for future fitness concerns or dignity. The complainant’s proposal was for a further two-year contract, i.e., not an extended or indefinite period.

In this case, the respondent only cited the complainant’s age, rather than the particular circumstances. While he had reached the revised retirement age, the complainant advanced a strong case to continue for a further two years or for some other fixed term. He had successfully rolled out the first two years of the project. He helped expand the team of mediators and assisted in this colleague’s professional development. This role involved mediation with young people and their families in dysfunctional situations; it would appear that a mix of ages was appropriate in addressing these challenges. This possibility was not considered by the respondent; it only looked at the complainant’s age and this was disproportionate and, therefore, beyond what was necessary.

Taking these factors into account, in particular that the complainant’s role with the respondent ended through unlawful and less favourable treatment because of the complainant’s age, the award of redress is €22,000.

Our Commentary

It is vital for Organisations to ensure that the inclusion of a compulsory retirement age in employment contracts serves a legitimate aim or purpose, and whether the Organisational means taken to achieve that aim or purpose are appropriate and impartial in a given situation.

There are considerations that an employer must be aware of when allowing an employee to remain working within the Organisation following their reaching the normal retirement age in the Organisation – precedence may be created. The case may arise where other employees decide they wish to stay working beyond the normal retirement age, and if this is not mutually acceptable, the Organisation may find itself in a situation where it is discriminating against an employee on the grounds of their age. It also raises the question as to what is the relevance of having a retirement age in place if it is not adhered to.

Workplace Relations (Miscellaneous Provisions) Act 2021

The Workplace Relations (Miscellaneous Provisions) Act 2021 has been signed into law. The purpose of the Act is to address concerns raised by the Supreme Court to address concerns raised in Zalweski v An Adjudication Officer and Others about the way the Workplace Relations Commission operates.

The Act allows for public hearings and the publication of party names in decisions of the WRC, as well as making provision for adjudicator officers to take evidence on oath or affirmation.

WRC Guidance on Workplace Relations (Miscellaneous Provisions) Act 2021

The Supreme Court found the legislation governing certain WRC procedures as being inconsistent with the Constitution, namely: the conduct of hearings in private; the absence of a provision for an Adjudication Officer to administer an oath or affirmation; and the absence of a possibility of punishment for giving false evidence.

The Workplace Relations (Miscellaneous Provisions) Act 2021 has been introduced to address these issues and came into effect on Thursday 29 July 2021. The WRC has updated its guidance for parties which includes:

Hearings in public and parties named in decisions: All hearings involving the administration of justice, except for disputes under Section 13 Industrial Relations Act 1969, will be done in public unless the relevant Adjudication Officer decides otherwise due to “special circumstances”. Some of the circumstances in which the Officer may require hearings in private include:

cases involving a minor
circumstances where a party has a disability or medical condition, which they do not wish to be revealed
cases involving issues of a sensitive nature such as sexual harassment
cases involving a protected disclosure where there is an issue of the disclosure being made in confidence.

Other than where these “special circumstances” apply, decisions will be published online and with the identities of both parties made public.

Evidence on oath or affirmation: Adjudication Officers can now require a person giving evidence in proceedings to do so on oath or affirmation and can administer such oaths and affirmations. Giving false evidence after doing so is a criminal offence punishable by way of imprisonment and/ or fine.

Appointment and Revocation of Adjudication Officers: The Act inserts a number of circumstances in which an individual will be ineligible for appointment as an Adjudication Officer or may have their appointment revoked. Examples include conviction on indictment of an offence, conviction of an offence involving fraud or dishonesty, a restriction or disqualification under Companies Act 2014. An appointment can also be revoked if the Adjudication Officer becomes incapable through ill-health of performing their duties, engaged in serious misconduct, failed to perform their functions for a continuous period of 3 months, or has contravened a provision of the Ethics in Public Office.

The power of appointments and revocations also now lies with the Government, rather than the Minister for Jobs, Enterprise and Innovation.