by Anne Lyne October-12-2016 in Employment Law
Anne Lyne examines the rise of the grey ceiling and its implications for individual company retirement age policies.
Retirement is the right of an employer to lawfully dismiss an employee upon reaching a certain age. It has traditionally been used as a means of lawfully managing the exit of older workers from the workforce and generally seen as a benevolent means of allowing workers to exit employment with dignity.
Longer working life
However, times are changing. The traditional retirement age of 65 has been in place since the end of the 19th Century and since then the average life expectancy has risen significantly. Indeed, the latest World Health Organisation statistics show that global life expectancy increased by five years between 2000 and 2015. This trend, combined with decimated pension pots, means more workers are ready and willing to stay in the workforce for longer.
This issue is only likely to become more contentious in the coming years in light of the State pension age changes. In 2014 the age of entitlement to the State pension was raised to 66 and further changes are coming down the tracks – 67 in 2021 and 68 in 2028. It is anticipated that more employees will be looking to bridge the income gap by remaining in the workforce.
Retirement age to be justified
While compulsory retirements are still permitted in Ireland, since January 2016 all retirement ages must be justified on a legitimate and objective basis. In effect, this puts the onus on the employer to show that the retirement age chosen for that workplace is fair and reasonable. Otherwise, such compulsory retirements will be considered to be age discrimination.
Further change
Two recent private members’ bills have tried to push the grey ceiling further by abandoning the concept of compulsory retirement in Ireland altogether.
The Equality (Amendments Act No.2) Bill 2012 proposed prohibiting a compulsory retirement age of 65 with limited derogations. A second similar bill, The Equality (Abolition of Mandatory Retirement Age) Bill 2014, proposed to abolish compulsory retirement ages where the employee is willing to continue to remain in employment. Both were proposed by opposition parties and have not progressed in the Dáil. However, the recent passing to Committee stage of the mortgage arrears legislation, tabled by Fianna Fáil and unopposed by Government, demonstrates the ability of opposition parties to bring legislation forward and may lead to these bills being restructured.
As regards the Equality (Abolition of Mandatory Retirement Age) Bill 2014, Minister Aodhán O’Ríordáin advised in his speech on 9 October 2015 that the then Government did not intend to oppose this Bill. He noted, however, that there are serious policy concerns. He wondered whether this is strictly necessary as the Equality (Miscellaneous Provisions) Act 2015 already brings the law into line with the European position (but does not remove a compulsory retirement age). He noted that the proposed Bill would involve setting aside the retirement provisions of most existing employment contracts on a unilateral basis and would have “serious implications for public sector employment, for pensions policy and for labour market policy generally”.
He noted that it would be a radical step – the objective, and whether there are other approaches that avoid any legal pitfalls, need careful consideration.
In the meantime employees should ensure that any specified retirement age is clearly set out in the contract of employment and is justifiable.
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About the Author
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Anne Lyne
Anne is a partner in the Employment team at Hayes solicitors. She has considerable experience advising and representing employers and employees on all aspects of the employment relationship from pre-employment matters to termination.