First published: 20th September, 2022 ------- Last Updated: 20th September, 2022
With both the State pension age and the cost of living going up, there is a growing number of employees seeking to work beyond the traditional retirement age of 65.
While your business can benefit from the experience of keeping older employees in their roles, postponing retirement is often a difficult HR issue for employers to handle.
Let’s take a look at retirement in Irish workplaces and how to handle it…
Mandatory retirement ages in Ireland: the law
The first point to note is that there is no law establishing a mandatory retirement age in Ireland. Some public servants like the Gardaí and members of the defence forces are subject to a statutory retirement age but there is no such equivalent for the private sector.
Employers may enforce a mandatory retirement age under Irish law subject to being able to demonstrate that the policy is objectively and reasonably justified by a legitimate aim. In addition, any mandatory retirement age chosen by employers must be an appropriate and necessary means of achieving your legitimate aim.
Many businesses include a retirement age in writing in the contract of employment or their company handbook. If there is nothing in writing, a retirement age may be identifiable through custom and practice.
What do I need to consider if I receive a request for longer working?
First of all, consult your employment documentation to confirm exactly what your business’s position on retirement is. If the contract contains a mandatory retirement age, explain the business rationale to the employee and why the retirement age is an appropriate and necessary way of achieving that business aim.
If you have no contractual retirement age, you need to tread carefully. In the absence of specific contractual provisions on retirement, case law has shown that employers are likely to be unsuccessful if they attempt to imply a contractual retirement age through the wording of occupational pension scheme documents. If you identify a gap in your contracts around retirement age, revise your contracts of employment and policies to include an appropriate retirement age. Unless of course you don’t see a business need for a retirement age in your company.
You will need to consider each request to continue working on an individual basis. Remember, if you accept one employee’s request to continue working, this could trigger a domino effect with older employees in different parts of your business all seeking to extend their working lives. You also need to bear in mind that if a number of employees continue working past your mandatory retirement age, the business justification for retiring at a certain age is weakened.
How should I handle a request to work past a mandatory retirement age?
The Workplace Relations Commission has developed a Code of Practice to provide guidance to employers who are in discussions with employees in the run up to retirement.
The Code of Practice on Longer Working was published in 2017 and contains useful advice for employers on handling requests for longer working as well as guidance around what constitutes a legitimate aim.
The Code of Practice looks at the following areas to help employers deal with requests for longer working:
- Utilising the skills and experience of older workers.
- Objective justification of retirement.
- Standard retirement arrangements.
- Handling requests to work longer.
Utilising the skills and experience of older workers
The Code of Practice recommends the following actions to ensure older workers continue to contribute to your business:
- Training of management at all levels about age diversity and the benefits of such diversity;
- Encouraging knowledge and experience sharing and utilising the skill and experiences of all workers;
- Exploring measures around flexible working patterns;
- Reviewing employment policies and procedures to identify age bias; and
- Encouraging a culture that appreciates the continuing need for relevant training and development amongst all age groups.
Objective justification of retirement
To ensure you comply with employment equality legislation, your retirement age must be capable of objective justification both by the existence of a legitimate aim and evidence that the means of achieving that aim is appropriate and necessary.
The Code of Practice sets out the following examples of what constitutes a legitimate aim:
- Intergenerational fairness (allowing younger workers to progress);
- Motivation and dynamism through the increased prospect of promotion;
- Health and Safety (generally in more safety critical occupations);
- Creation of a balanced age structure in the workforce;
- Personal and professional dignity (avoiding capability issues with older employees); or
- Succession planning.
Standard retirement arrangements
The Code of Practice recommends three preparatory steps to help ensure employers have a standard way of handling retirement issues.
- Identifying Individual Intentions
Whether there is a contractual retirement date or not, it is reasonable as part of workforce planning for an employer to raise and discuss with the employee, their retirement intentions.
- General Information/Supports
The Code of Practice recommends that employers provide clear information to staff on:
- How retirement procedures work, both at recruitment and at regular occasions throughout an employee’s career.
- How to access reliable and informative information on retirement. This information should be provided whether your business has a pension scheme in place or not.
The best course of action is to include all this information in a retirement policy to be provided to your employees.
- The Retirement Process
The Code of Practice recommends notifying an employee of the intention to retire him/her on the contractual retirement date within 6 — 12 months of that date. The initial notification should be in writing and followed up with a face-to-face meeting which should focus on addressing the following:
- Reaching a clear understanding of the retirement date and any possible issues arising;
- Exploration of measures (subject to agreement) which would support the pathway to retirement, for example flexible working, looking at alternative roles up to the date of retirement;
- Transitional arrangements in regard to the particular post; and
- Assistance around guidance and information.
Request to Work Longer Procedure
In dealing with a request to work longer the Code of Practice recommends the following:
- The employee should make their request to keep working beyond retirement age in writing no less than three months from the intended retirement date. A meeting between employer and employee should follow promptly.
- The employer’s decision should then be communicated to the employee as early as practical following the meeting.
- Should you agree to grant a request for longer working, consider offering a fixed-term contract. Bear in mind however that the offer of a fixed-term contract to an employee who is over your retirement age must also be objectively and reasonably justified by a legitimate aim and the offer of a fixed-term contract must be appropriate and necessary. The Irish Human Rights and Equality Commission’s guidelines on Retirement and Fixed-Term Contracts sets out more guidance for employers who find themselves in this scenario.
- Should you refuse the employee’s request, the grounds for the decision should be set out and communicated in a meeting with the employee. This will help the employee to understand why the request has not been granted, and give the employee confidence that his/her case has been given serious consideration and that there are good grounds for refusing the request. Once a decision is made, confirm the reason in writing and advise the employee that the decision is based on their individual circumstances and is not a general workplace policy.
- You should also provide the employee with a right to appeal the decision. You are entitled to hear this appeal through your established grievance procedures. Remind the employee of their right to be accompanied by a work colleague or union representative to discuss their request to keep working and in any appeals process.
Get retirement right with expert advice
Does your business have procedures in place for handling conversations around retirement? Does your employment documentation set out the right information on retirement?
You risk suffering an age-related discrimination claim if you mismanage an employee’s request to keep working longer.
With an ageing workforce, requests for longer working are going to become more common and you’ll need to be well prepared to enter discussions with your older employees.
Peninsula’s experts have years of experience handling every HR issue from recruitment to retirement.
Call [ ] to speak with one of our HR and health & safety experts about how to manage this technical area.