knowledge | 20 September 2019 |
Another bump on the road to mandatory retirement
Age discrimination claims arising from mandatory retirement have increased exponentially in recent years and this is likely to continue to be an area of interest for employers and employees alike. Organisations seeking to maintain compulsory retirement ages must ensure that a retirement age is properly incorporated into employees’ contractual terms and is capable of “objective justification”. A recent case before the Labour Court is a stark reminder that, in the absence of a contractual basis for a retirement age, employees can receive not only compensation for age discrimination, but orders of reinstatement or reengagement can also be made, which can wreak havoc for employers.
In Longford County Council –v- Michael Neilon (UDD1950), the complainant had been employed by Longford County Council as a lorry driver since 1980 and claimed that he was forced to retire when he reached the age of 66. In proceedings for unfair dismissal, he maintained that the customary retirement age for lorry drivers to retire from the respondent was 72 years of age. The Labour Court in its determination noted that it was “significant” that it had not been furnished with any contract of employment specifying a mandatory retirement age for the employee, nor any collective agreement or pension scheme which substantiated the employer’s position that 66 years of age is the normal retirement age for lorry drivers. This was especially so as the employer’s own policy on retirement provided that employees’ retirement ages were “dependent on his/her relevant contract of employment, with due consideration being given to the rules of the Superannuation Scheme to which he/she belongs”.
The Labour Court was also influenced by the information supplied to the employee at a meeting in 2006, when the employer’s Finance Officer was alleged to have orally advised the employee and others that “they could work until the age of 70”. The Court was also supplied with details of a number of employees “in similar circumstances” to the employee who had retired past the age of 66 from the employer which, again, it considered “significant”. For these reasons, the Court determined that Longford County Council had not established that a normal retirement age existed of which the employee was or ought to have been aware. Significantly, the Court in ordering redress was mindful of the serious efforts made by the employee since his dismissal to secure alternative employment and reinstated him to his former position until he reached the age of 70.
In many cases, as in Longford County Council –v- Neilon, employers have failed to pass the initial hurdle of proving that a retirement age existed as a matter of fact. Where the age is not incorporated into employees’ employment contracts, it can be established by showing that a custom and practice exists where employees in the organisation routinely retire at a certain age. However, this is a complicated task and such an argument is likely to be undermined by an employee’s claim that they were not aware of such a retirement age or by evidence that other employees worked beyond that retirement age. Even where a retirement age can be shown to exist, the age must then be objectively justifiable if it is to be enforced, usually by reference to social policy objectives such as intergenerational fairness.
The recent decision in Longford County Council –v- Neilon is particularly notable as it resulted in an award of reinstatement for the employee, which awards are especially rare in cases of this nature. While the Labour Court determination does not refer to any position taken by the employer concerning redress, it is likely that such an award would pose significant practical problems for an employer. Not only would the reinstatement of the employee further undermine an organisation’s retirement age, but the organisation may then struggle to provide employment benefits to those over the retirement age, especially those which involve insurance cover. This issue would also arise where injunctive relief is obtained to restrain the termination of employment on the grounds of reaching a purported retirement age, as ordered by the High Court in Quigley –v- HSE. Other recent cases including Valerie Cox –v- RTÉ have highlighted that, where reinstatement is not ordered, significant awards of compensation can be made in cases concerning mandatory retirement.
Employers need be confident of the existence of and justification for any retirement age before seeking to rely on it. Best practice now requires that employers adopt clear policies concerning retirement which adhere to the recently adopted “Code of Practice on Longer Working” and are communicated clearly to all employees. Employing retired employees on fixed-term contracts beyond their retirement age should be the exception rather than the rule. In the longer term, as there continues to be a political impetus for reform, employers should be aware that the scope to sustain a compulsory retirement age is likely to narrow.
The Employment, Pensions and Incentives Group at McCann FitzGerald has significant experience of advising clients in the public and private sector on employment and pensions issues relating to mandatory retirement. Your usual contact would be pleased to provide further information.
Contributed by: David McCauley
This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.