A series of recent WRC cases on the issue of retirement age demonstrate the importance of forward...

A series of recent WRC cases on the issue of retirement age demonstrate the importance of forward planning by Organisations both in respect of their approach to the issue of retirement ages generally and in respect of the process for engaging directly with individual employees who are nearing retirement age.

Facts:

Case 1: Deborah Toland v Lifford Credit Union Ltd – ADJ 00035673

The Claimant had been employed as a Teller with the Respondent. She had 21 years service and claimed she was forced to retire upon reaching the age of 65. There was a clause in the employment contract confirming a retirement age of 65 but providing for an extension beyond 65 by mutual consent.

There was an argument around whether the Claimant was bound by that clause as she had not signed the contract. On that point the Adjudicator found that the Complainant could not invoke the contract to rely on an extension by mutual agreement and at the same time contend she was not bound by the 65 year age limit due to never having signed the said contract. The Adjudicator held that a contractual retirement age clause of 65 did apply.

Nonetheless, the Adjudicator having examined the facts determined the Claimant had been discriminated against on the grounds of age and awarded €25,000.00.

Case 2: Carl Davidson v Amari Ireland Limited – ADJ00037279

The Claimant had been employed as an Aluminium Product Specialist with the Respondent. He had 27 years service.  His contract contained a retirement age provision of 65.

He was given a fixed term contract for one year post retirement. His employment was not renewed thereafter.

The Claimant argued there was no compulsory retirement age as the aforementioned contractual retirement age of 65 was widely disregarded and that in any event the Respondent could not establish that a retirement age of 65 pursues a legitimate aim.

His employment equality claim was unsuccessful for reasons discussed below.

Case 3: Patrick O’Callaghan v Ferrero Ireland Limited – ADJ00043459

The Complainant commenced employment with the Respondent in September 2011 as a General Operator and retired at the grade of Machine Operator. His employment ended in September 2022 on his 65th birthday.

The Adjudicator was satisfied that the Complainant had knowledge of the retirement age through his employment contract and the employee handbook and the operation of the pension scheme.

Nonetheless upon examining the facts, the Adjudicator found the employee had been discriminated against on the grounds of age and awarded €20,000.00.

Case 4: Thomas Doolin v Eir Business Eircom Limited – ADJ00045261

This case represents an extremely interesting development in the area of retirement age claims as the WRC ordered that the employee be reinstated to his role. We have already covered this case in detail in an earlier article which can be found at this link - https://aocsolicitors.ie/worker-reinstated-after-wrc-finds-that-eir-discriminated-against-him-on-grounds-of-age/

Decisions:

While the specific facts of each of the above cases varied there were important (and in many cases) reoccurring themes that influenced the outcomes. These are summarised below.

Is there a clear contractual retirement age

At the very minimum, if an employer wants to terminate an employment relationship on the grounds of reaching retirement age, they need to be in a position to prove there was a contractual retirement age clause in place.

Ideally such a clause should be included in the written contract of employment but as discussed in Case 2 above, the Labour Court has shown a willingness to consider that it might be provided for by incorporation where some other document or instrument, of which the employee had notice, can be read in conjunction with the formal contract of employment.

There is also some scope for an employer to argue that a contractual retirement age clause has been implied into the contract by reference to the “officious bystander” /custom and practice tests. However, there is a heavy onus on an employer seeking to prove that a compulsory retirement age was implied into a contract of employment.

Objective Justification and Proportionality

While it is open to an employer to impose a mandatory retirement age, in order for the retirement age to be upheld it needs to be objectively and reasonably justified by a legitimate aim and the means of achieving that aim must be appropriate and should go no further than is necessary.

One Legitimate aim is enough

Helpfully for employers there is a well-established principle outlined in the High Court case of Donnellan v Minister for Justice, Equality and Law Reform & Ors [2008] IEHC (hereafter “Donnellan”) that where there are multiple reasons given for a retirement age, it is enough if one or more amount to a legitimate aim. This principle was reaffirmed in some of the above cases.

Individual Assessment is Key

All four of the above decisions included reference to the principle outlined by Mr. Justice McKechnie in Donnellan that the imposition of retirement age should be individually assessed on a case-by-case basis.

The WRC is unlikely to accept mere generalisations or general probabilities as sufficient to justify a mandatory retirement age. Lack of individual assessment came against the employers in three of the four cases above.

In case 3 for example one of the reasons advanced for the retirement age was intergenerational fairness. An argument was made that the Claimant’s position of Machine Operator was a promotional position and the vacancy arising would lead to intergenerational fairness from a natural upward mobility. However, the Adjudicator noted that in reality only two people had applied for the position and the position attracted a relatively modest premium with no quantum leap in skillset required by a potential applicant. The Adjudicator was satisfied that such positions could be created quite easily without recourse to a discriminatory measure.

In that same case another reason for the retirement age put forward by the employer was heath and safety in the packaging department where bulky items were carried by lifting equipment. The Adjudicator noted that no risk assessment was done by the Respondent and no evidence was forwarded to show the tasks carried out by the Claimant were arduous or physically demanding to the degree that it could compromise any “safety critical” dimension of the role. Furthermore, it was noted that the employee was now working as a van delivery person for another company which involved an amount of physical agility and alertness.

In addition to confirming there must be an individual assessment Case 4 suggests that as part of that individual assessment the future job prospects and anticipated reduction in income of the employee need to be taken into account by the employer.

Retrospective justification will not work

Employers need to be clear up front about the reason for the retirement. In Case 1 the Adjudicator made reference to the Respondent having sought to expand the reasons for the retirement age in its WRC submission. The Adjudicator refused to take those expanded reasons into account.

Consider other options

The Employer needs to consider alternatives to an imposed retirement including for example a post-retirement fixed term contract, an alternative role or a part time working arrangement. In Case 1 above the employer was criticised for not having done so.

Post Retirement Fixed Term Contracts

Where there is a contractual retirement age in place and the employee wishes to work beyond the retirement age, one option that can be considered is whether to issue a post-retirement fixed term contract. This is what happened in Case 2 above and it proved extremely helpful to the employer in defending the employee’s claim.

In deciding in favour of the employer in that case the Adjudicator took an interesting approach. He noted that there had been no indication from the Claimant that he objected to the post-retirement fixed term contract and he did not utilise the Respondent’s Grievance Procedure at any time before the expiry of that one year contract.

The Adjudicator also seemed convinced by the Respondent’s argument that any allegation of discrimination in respect of the original retirement age of 65 was now out of time as the complaints were not lodged with the WRC until almost 17 months later (the normal limitation period in an employment equality claim is six months). The Adjudicator commented that “this point cannot be overlooked”.

The Adjudicator then went on to find as follows:

“In coming to a conclusion I believe that at all times the Complainant was aware that he was due to retire on his 22/09/2020, he was then offered a post retirement one year fixed term contract, he accepted this contract and did not utilise the respondent’s grievance procedure until after the expiry of this fixed term contract.

I do not believe that any discrimination has taken place. The Complaint as presented is not well founded.”

The Respondent’s submission in Case 2 also referenced a previous WRC case where a similarly helpful decision for employers was issued in similar circumstances (Peter O’Loughlin and the Health Service Executive ADJ-0002633).

Employers should be aware (and particularly so in light of the above decisions) that issuing a post-retirement fixed term contract may be helpful to the employer in defending a subsequent discrimination claim by that specific employee. However, employers also need to balance this against the precedential effect routine extensions of employment beyond retirement age may have. This is discussed further below.

Setting a Precedent

Employers will often query whether allowing one employee to work beyond the normal retirement age could set a precedent and leave the employer in difficulty in terms of defending the strict imposition of the normal retirement age on others thereafter. Potentially it could, however, it depends on the facts and in particular the reason for the extension. If there are reasons to extend certain employees that can distinguish those cases as different to the norm, this helps the employer in terms of any subsequent challenge by an employee that the normal retirement age has been undermined.

Case 3 is noteworthy on this point in that three employees had previously been extended beyond the retirement age of 65 yet the Adjudicator determined the decision to retain those three employees was exceptional (for specific reasons outlined in evidence) and did not in and of itself undermine the Respondent’s policy that all employees should retire at 65.

Follow the Code of Practice on Longer Working

All four decisions specifically discussed the Industrial Relations Act (Code of Practice on Longer Working Declaration) Order of 2017 (hereafter “the Code”). Although the Code is not prescriptive it seems clear from reading the decisions that an employer is expected to have regard to it.

For instance, in Case 1 the Adjudicator referenced the requirements outlined by the Code in respect of notification procedures, the carrying out of objective assessments in the context of justifying retirement and access to an appeals mechanism and specifically noted that none of this was observed by the Respondent.

Similarly, in Case 3 above, the Adjudicator noted no evidence had been given regarding policies and procedures having been developed to increase an age diverse workpace that encourages retention of older workers and longer working lives. The Adjudicator also noted the HR manager could not remember if she had received training on age diversity. These are all suggested best practices as per the Code and employers would be well advised to adopt them.

While on the topic of the Code it is worth noting that the Code specifically suggests the employer should notify an employee of their proposed retirement in the region of 6 to 12 moths in advance and engage with them in the manner envisaged by the Code.

Takeaway for Employers:

Forward planning is key. If an employer wants to be able to lawfully terminate the employment relationship on the ground of retirement, there are steps that need to be followed almost from the very outset of the employment relationship. These include:

Link:

https://www.workplacerelations.ie/en/cases/2024/january/adj-00035673.html

https://www.workplacerelations.ie/en/cases/2024/january/adj-00037279.html

https://www.workplacerelations.ie/en/cases/2023/november/adj-00043459.html

https://www.workplacerelations.ie/en/cases/2023/november/adj-00045261.html

Author – Laura Killelea