Retirement and fixed term contracts

Peninsula Team

August 31 2015

There seems to be quite a grey area when it comes to retirement and the ability to retire staff.  Previously if a Company had a compulsory retirement age, you could have safely rely on section 34 (4) of the Employment Equality Acts in order to retire employees. However from recent case law, the Equality Tribunal make it very clear that employers can no longer rely on this sections' defence alone but must also be able to objectively justify a compulsory retirement age. This is further supported by the introduction of the Retirement Bill which is due to be introduced. A question that always comes up is “Why can’t I retire someone who has reached retirement age and why should I have a retirement policy in my contract if I can’t retire an employee”. Prior to the introduction of the retirement bill, having consideration to recent case law, Tribunals have sought the objective grounds to retire the employee not just the presence of the retirement clause in the company handbook. Examples of reasons to objectively justify retirement have included successfully arguing health and safety reasons to retire an employee or where the retirement would motivate and promote the increased prospect of promotion to other staff below the person’s grade. A further question that always comes up is “What if I want to keep the employee in work for a period after they hit the retirement age can I then retire them after this?” A further development in this area has been the outcome of McGuinness v Maynooth Mission to China  Inc, t/a Columban Missionaries case, where the Equality Officer ruled that “offering a fixed term contract to a person over the compulsory retirement age […] shall not be taken as constituting discrimination on the age ground”. So whilst giving a fixed term contract to an employee of retirement age would have to be justified heavily and could constitute grounds for discrimination, this recent ruling gives the employer the opportunity to discuss the retirement with the employee, offer a fixed term contract and possibly terminate this fixed term contract at the end of the term.  Example justification for this could include offering a fixed term contract for the duration of the replacements training and handover period. If you have any questions on the above article or if you have any query in general about annual leave or sick leave then please do not hesitate to contact the 24 Hour Advice Service on 01 855 5050.

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