March 01, 2021
The issue of retirement age became topical again earlier in February when it was announced that those retiring at 65 and unable to claim the State Pension would no longer be required to sign-on and make themselves available for work until they reached 66.
Previously employees with an employment contract that stipulated that they retire at 65, had to sign on the live register to claim Job Seeker’s Allowance and prove that they were genuinely looking for work. However, this particular solution will leave people retiring at 65 €45 per week worse off than those in receipt of the State pension.
But what happens if an employee does not want to retire at 65 and requests to work longer? Our advice is to take any request to work longer under careful consideration given the potential implications in terms of compliance with employment legislation.
While there is provision in the Employment Equality Acts, 1998 – 2015 that states that fixing a retirement age does not constitute age discrimination, there have been several successful WRC claims made in favour of employees who have been treated unfairly due to their age.
The Workplace Relations Commission prepared a Code of Practice on Longer Working back in 2018 to help provide guidance for employers when managing retirement among employees. The areas of guidance are:
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Utilising the skills and experience of older employers
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Objective justification
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Retirement arrangements
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Dealing with requests to work longer
Utilising skills and experience
The Codes sets out some measures that can be taken by employers to use the skills and experience of older employees, including training on age diversity, encouraging the sharing of knowledge and experience, ensuring there is no age-related bias and encouraging a culture where there is a need to train employees of all ages.
Objective justification
Any compulsory retirement age is not discriminatory if it can be justified objectively “both by the existence of a legitimate aim and evidence that the means of achieving that aim is appropriate and necessary’. This could include:
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Intergenerational fairness (allowing younger workers to progress);
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Motivation and dynamism through the increased prospect of promotion;
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Health and Safety (generally in more safety critical occupations);
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Creation of a balanced age structure in the workforce;
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Personal and professional dignity (avoiding capability issues with older Employees); or
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Succession planning.
Retirement arrangements
The Code sets out guidance for employers on how to support the employee’s transition to retirement including:
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Opening a dialogue with individual employees on their plans around retirement, particularly where no contractual retirement age exists, so that there is a clear understanding between the parties
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Providing supports such as, pre-retirement courses, flexible working arrangements and/or counselling to facilitate the transition to retirement
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Providing clear information to employees on retirement procedures, both at recruitment stage and at regular intervals during employment
Request for longer working
Any request should be considered carefully as already stated and employers should consider the following when assessing any requests:
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Grounds or reasons the request should be accepted or refused
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The factors that are impersonal to the employ
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What form would any extensions might take (fixed term contract, etc)
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And, whether flexible working might be more appropriate
The Code also sets out the process and timeframe that any request should be considered, including outlining the procedure for meeting with the employee, granting or refusing the request in writing and clearly stating the reasons for the decision.
Conclusion
We always advise that a retirement age is specified in the Terms of Employment for all employees. This provides a clear understanding from the outset of the relationship.
But if a request for longer working is submitted, it should be considered and assessed on the merits of the employee and the needs of the business. Employers need to bear in mind that every employee must be treated fairly and consistently when addressing future requests as well as the potential impacts on existing contracts.
And, look at all available options in terms of the employment relationship.