knowledge | 2 February 2018 |
Retirement Ages: New Code of Practice
The Workplace Relations Commission (“WRC”) has, in consultation with IBEC, ICTU and relevant Government Departments, published a Code of Practice which sets out best practice on the management of retirement in organisations. The Industrial Relations Act 1990 (Code of Practice on Longer Working) (Declaration) Order 2017 (the “Code”)1 provides useful and comprehensive guidelines on the challenging issue of retirement ages in employment. The Code should be read in conjunction with section 34(4) of the Employment Equality Acts 1998-2015 and will be the starting point for employers in managing the engagement with employees on this particularly sensitive topic.
Employers will be aware that, while they have discretion in fixing mandatory ages of retirement, such ages must be “objectively justified” by a legitimate aim, and the means of achieving that aim must be appropriate and necessary.
Decisions on retirement ages to date
Mandatory retirement ages continue to generate a significant amount of litigation and there have been a number of instructive cases recently.
Quigley v HSE
In Quigley, the High Court granted an injunction restraining the termination of the employee’s employment on the grounds that he had reached the HSE’s purported mandatory retirement age. The Court decided that the employee had made out a “strong case likely to succeed” on the basis that no one in the same contractual position as the employee had been forced to retire on attaining 65 years of age. The HSE had relied on an alleged “custom and practice” as well as the terms of the employer’s pension scheme under which membership ceased upon reaching the age of 65. However, the employee’s contract of employment was not subject to any express retirement age, and the employee’s colleagues gave evidence that they were unaware of any retirement age and had been working beyond the age of 65. The case demonstrates the fundamental requirement for employers seeking to rely upon mandatory retirement ages to ensure that such a clause is, in the first instance, incorporated into the contract of employment.
Connaught Airport Development Limited v John Glavey
The WRC refused to imply a mandatory retirement age into a contract of employment on the basis of custom and practice, in circumstances where there was no evidence or documentation from which it could be discerned that the employee had been informed of such a retirement age.
Transdev v Michael Chrzanowski
A retirement age of 65 was implied on the basis of custom and practice in circumstances where the employee had signed up to both a Collective Agreement and a Pension Scheme which explicitly referenced the retirement age and where all workers retired at 65 years of age. The retirement age was considered objectively justifiable on the basis of health and safety concerns in the context of the safety critical role of a tram driver.
In 2017, the Citizen’s Assembly voted by 86% in favour of abolishing mandatory retirement ages. This followed the publication of the Employment Equality (Abolition of Mandatory Retirement Ages) Bill 2016 (the “Bill”). The Bill, which was supported by the Government “in principle”, proposed to prohibit employers from setting or contracting for a mandatory retirement age and was intended to apply retrospectively to pre-existing contracts of employment. The Citizens Assembly also voted 96% in favour of removing any time gap between retirement and eligibility for the old age pension.
The Code was issued just before Christmas 2017 and following the recommendation of the Interdepartmental Group on Fuller Working Lives. In general terms, the Code encourages employers to maximise the skills of older workers by ensuring that managers are appropriately trained about age diversity, ensuring that policies and procedures are proofed for age bias and by exploring flexible working measures.
Objective Justification - Guidelines
The Code usefully sets out the following examples of what may constitute an employer’s legitimate aim in fixing mandatory ages of retirement:
- Intergenerational fairness – by allowing for the promotion of younger workers;
- Motivation – by increasing prospects of promotion;
- Considerations of health and safety;
- Creation of a balanced age structure across the workforce;
- Considerations of dignity – by avoiding capability issues with older employees; and
- Succession planning.
The Retirement Process
The Code encourages employers to consider the provision of supports such as pre-retirement courses, flexible working arrangements and/or counselling to assist employees’ transition to retirement. Employers should, in accordance with the Code, provide employees with clear guidance about retirement procedures, both at recruitment and throughout the employee’s career, irrespective of whether the employee is a member of any pension scheme.
The Code provides that, where an employer intends to retire an employee upon attaining the mandatory retirement age, it is best practice for an employer to notify the employee 6-12 months in advance of that date. This notification should be in writing and the employer should then hold a face-to-face meeting with the employee to ensure the employee appreciates the retirement date. The meeting should address any issues arising, explore measures that may support the employee in approaching retirement, address transitional arrangements for the role and provide guidance and information to the employee.
Dealing with Requests to Work Longer
The Code provides that a request from an employee to work beyond their mandatory retirement age should be considered carefully. The employee is required to consider whether he or she can continue to perform the role to the requisite standard. He or she must also consider the pension and employment implications of the request, and whether flexible or alternative working arrangements can be agreed.
The employer, meanwhile, should consider the grounds upon which they may accede to or deny the request. Employers should have objective criteria by which to assess such requests in order that a consistent approach is taken. On a more practical level, employers must also consider how an arrangement for the employee to remain in the workforce might be contractually framed, for instance by means of a fixed term contract. Employers must also consider granting a request on the basis of flexible working arrangements.
The Code provides that an employee seeking to work beyond their retirement date should make their request in writing no less than three months from the intended retirement date. This should be followed by a meeting with the employer at which the employee can advance his/her case. The employee may be accompanied to such meetings by a work colleague or union representative. An employer is obliged to communicate their decision to the employee, after considering the request on fair and objective grounds, as early as possible following the meeting.
Where an employer resolves to offer the employee a fixed-term contract post-retirement age, the period of the contract should be clear, as should the legal grounds underpinning the new contract. The WRC recommends that the offer of a fixed-term contract should make it clear that (i) the decision was made solely having regard to the case made by the employee and (ii) that it does not apply universally.
Where the employer resolves to refuse the employee’s request, this should be communicated in a meeting with the employee during which the grounds for refusing the request are made clear. The employee should have recourse to an appeals mechanism, such as that provided for in the employer’s grievance procedure.
While the new Code is not legally binding, it is likely to be very influential to a WRC Adjudication Officer when faced with claims concerning the application of mandatory retirement ages. Adherence or non-adherence to the Code is likely to become a significant feature in the application of mandatory retirement ages in organisations, and in dealing with requests from employees to work beyond the mandatory retirement age.
For the moment, employers seeking to apply mandatory retirement ages in their organisation should, in the first instance, ensure that a retirement age is properly incorporated into employees’ contracts. However, as most employers will already be aware from their existing obligations under the Employment Equality Acts, before relying on it, employers will need to ensure the retirement age that they have fixed can be objectively justified by a legitimate aim. The guidelines set out in the Code is likely to be of significant assistance to employers when making this assessment.
Finally, the Code’s guidance on longer working procedures is also notable as the proportion of older workers seeking to continue in employment beyond their retirement age is forecast to grow significantly in the future. Employers would be well-advised to consider the Code’s guidance on longer working as soon as possible so they can ensure that appropriate procedures are put in place for dealing with such requests.
Also 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.