A Code of Practice on Longer Working (“the Code”), has issued under the Industrial Relations Act 1990 by the Workplace Relations Commission (“WRC”). The WRC was requested by the Minister for Business, Enterprise and Innovation to prepare the Code, following the recommendation of the Interdepartmental Group on Fuller Working Lives Report in August 2016. The Code offers guidance and best practice to employers, employees and their representatives, on managing engagement between employers and employees in the run up to retirement.
The Code provides broad guidance to employers in dealing with employees, who are approaching the employer’s mandatory retirement age and sets out best practice for utilising the skills and experience of older workers, objective justification of retirement, standard retirement arrangements and requests to work longer. It is important to note that the Code is not legally binding but an employer, who faces a challenge connected with retirement, would have to justify its decision not to apply the Code.
The Employment Equality Acts prohibits discrimination by an employer on the grounds of age. However, the Acts specifically provide that it shall not constitute discrimination on the grounds of age for an employer to set a mandatory retirement age, once this is;
- objectively and reasonably justified by a legitimate aim, and
- the means of achieving that aim are appropriate and necessary.
There is no mandatory statutory retirement age in Ireland, except for employees in certain public sector occupations. Traditionally, a mandatory retirement age of 65 has been inserted into employment contracts, partly because this was the age in which employees started to receive the State pension. As the date of State pension drawdown increases, which is currently 66 but is to rise to 67 in 2021 and 68 by 2028, employees and their representatives have become more and more concerned in how they will bridge the gap in income between the mandatory retirement age and the State pension age. This, together with numerous other reasons (including, that we are living longer, and where some employees will want to continue to work past 65), have recently brought mandatory retirement ages into the spotlight.
Although a mandatory retirement age is typically expressly provided for in the contract of employment, it can also arise in the following ways;
- it can be implied by the custom and practice of the employer,
- it can be provided for in the employer’s pension scheme, and
- it can be set out in the employee handbook.
Skills and Experience of Older Workers
The Code provides that employers should recognise the contribution that older workers can bring to the workforce and recommends that employers should promote a culture, which recognises age diversity and the benefits of such diversity. The Code recommends that employers should utilise older workers’ skills and experience and encourage the sharing of skills among all workers.
The Code provides examples of what may constitute a ‘legitimate aim’ by an employer in setting a mandatory retirement age:-
- Intergenerational fairness (allowing younger workers to progress).
- Health and safety in safety critical occupations.
- Personal and professional dignity (avoiding capability issues with older employees).
- Creation of a balanced age structure in the workforce.
Standard Retirement Arrangements
The Code acknowledges that good workforce planning is critical. It provides that if no contractual retirement dates which are objectively justifiable exist, an employer should discuss with its employees his/her retirement intentions.
The Code recommends that employers should provide clear information on how retirement procedures work, both at the recruitment stage and at regular intervals during an employee’s career. The Code further recommends that an employer should consider providing supports to employees nearing retirement age, such as flexible working arrangements, pre-retirement courses and counselling.
The Retirement Process
The Code recommends that employees be notified in writing of an employer’s intention to retire him/her, within 6-12 months of the date. This will allow time for the employee to make plans and obtain advice. Following the initial notification, the Code recommends that a face to face meeting be arranged to address the retirement date, transitional arrangements and measures that will support the pathway to retirement (to include flexible working or looking at alternative roles, up to the date of retirement) and to assist with guidance, information and possible issues that could arise.
Request to Work Longer
The Code recommends that employers carefully consider any requests by employees to work longer than his/her prescribed retirement age. Factors that employers should consider, before accepting or rejecting an employee’s request, are set out in the Code:-
- Can the retirement age be justified on a legitimate and objective basis?
- How would the arrangements for the employee remaining in the workforce be contractually framed?
- Could the request be granted on the basis of more flexible working arrangements?
The Code sets out the recommended procedure, which the parties should follow in dealing with a request to work longer.
- An employee should make the request in writing at least three months before his/her intended retirement date.
- A meeting should be set up between the parties.
- The employer should communicate the decision to the employee, as soon as possible following the meeting.
- The decision must be based on fair and objective grounds.
If an employee’s request to work longer is accepted, the period should be specified, and the legal grounds underpinning the new contract should be made clear. The Code recommends that it be made clear that the decision is made solely having regard to that particular employee’s situation, to minimise the prospect of it being construed as a precedent for other employees.
A fixed term contract is commonly offered for the period, which extends beyond normal retirement age. However, employers should be aware that the Equality (Miscellaneous Provisions) Act 2015 specifically requires that a fixed term contract post-retirement age be objectively and reasonably justified by a legitimate aim and that the means of achieving that aim are appropriate and necessary.
To best protect its business and to alleviate the risk of successful claims for age discrimination, at a minimum, employer’s should;
- Adhere to the recommendations set out in the Code;
- Consider if its current policies and procedures around retirement need to be amended to reflect the Code. In particular, employers should consider if its mandatory retirement age can be objectively justified;
- Review the age demographic of its current workforce and ensure that employees, who are nearing retirement age, are made aware within 6-12 months of the retirement date;
- Consider what supports and services it can offer to employees who are nearing retirement age.
- Consider a request made by an employee to work longer by following the procedure set out in the Code, and ensure that its decision to extend, or not extend, the employment is made on fair and objective grounds.
The Code can be accessed from; http://www.irishstatutebook.ie/eli/2017/si/600/made/en/pdf
This article 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.Back to Full News
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About the Authors
Breda practises in both Employment and Commercial Law and is currently the Head of the Employment Law team at Hayes solicitors. Breda has trained and qualified as a mediator with the UK based, internationally renowned Centre for Effective Dispute Resolution (CEDR). Breda practices as a mediator of commercial, employment, boardroom, charity trustee and shareholder disputes.
Rachel Kelly is a solicitor in the Employment Law team at Hayes Solicitors. Rachel advises both employers and employees on a wide range of issues affecting the employment relationship, from pre-employment matters through to termination of the employment relationship. Rachel’s advisory work includes drafting employment contracts, consultancy agreements, employer policies and termination agreements.