WRC finds charity worker's retirement age valid for succession planning reasons

A significant number of Irish employers include a mandatory retirement age in their contracts of employment or employee handbooks. The Employment Equality Acts 1998-2021 prohibit discrimination in employment on a number of grounds, including age.

However, there is an exception that allows employers to impose a mandatory retirement age on employees provided that the practice is objectively justified. Section 34(4) of the Employment Equality Act 1998 (EEA) provides that it shall not constitute age-based discrimination to fix a retirement age for employees if the following conditions are met: 

• it is objectively and reasonably justified by a legitimate aim; and
• the means of achieving that aim are appropriate and necessary.

Health and safety concerns in safety critical occupations, intergenerational fairness, the preservation of personal and professional dignity by avoiding capability issues with older employees, succession planning have all been accepted by the Workplace Relations Commission in the past.

Mandatory retirement ages have become increasingly difficult to justify and enforce in recent years however, in a recent WRC decision in the case of An Employee v A Charity and Family Service ADJ-00045740, the Adjudication Officer (AO) concluded that the company had satisfied the provisions of section 34 (4) of the Employment Equality Acts in declining the worker’s request to work beyond the retirement age for a further year.

Employee’s Case

The Complainant worked until she reached the age of 66, in accordance with her contract of employment. She requested to work beyond the retirement age for a further year, but this request was refused despite her being capable and competent to do so. No objective grounds were given for the refusal and she was informed that no employee had previously been allowed to work beyond the age of 66. The employee invoked the grievance procedure but was unsuccessful. The company pointed to the fact that the employee’s contract stated her contractual retirement age was “state pension age”. However, the company did admit that a limited number of staff have remained in employment beyond the age of 66 in roles that are not open to promotion, and that one Senior Manager remained in employment after 66 for three months in order to complete an identified project. The employee maintained that the employer did not provide sufficient objective and justifiable grounds for refusing her request to work beyond age 66.

Employer’s Case

The employer argued that it had presented legitimate aims and objective justification for relying on the complainant’s contractual retirement age. These were – intergenerational

fairness, a wish to increase staff motivation and dynamism through the increased prospect of promotion, to assist staff retention and to create a balanced age structure across the organisation. It also argued that there was no precedent for employees in the complainant’s role being allowed to work beyond age 66. While a number of staff had been allowed to work beyond age 66, these were in roles which were not open to promotion.

The employer provided evidence that five employees in the Complainant’s role would need to be to be replaced due to retirement by the end of 2027. There had been an increase in staff turnover, which they say was mainly due to retirement and lack of opportunities. In 2023, the company lost three high potential employees identified as potential successors who left the organisation due to the lack of progression and available managerial opportunities. The employer maintained that their retirement policy in relation to the complainant’s role amounts to a legitimate aim and the means of achieving that are appropriate and necessary.

Decision of Adjudication Officer

The Adjudication Officer accepted the employer’s evidence that prior to the complainant’s request to work beyond retirement age it had been taking measures to help retain staff that had the potential to be promoted to the complainant’s role, which underscored its justification for refusing the employee’s request. The AO also accepted the company’s evidence that the exceptions to their retirement policy were made for employees who were not in a role from which promotion was possible. The only other exception was for someone at a similar level to the complainant for a fixed period of three months to complete an identified project.

As such, the AO concluded that the company had satisfied the provisions of section 34(4) of the Employment Equality Acts in that their retirement policy in relation the complainant’s role as it was applied to the complainant was objectively and reasonably justified by a legitimate aim and the means of achieving that aim were appropriate and necessary.

Key Takeaway for Employers

Succession planning is a key issue for employers at the moment and this decision is a welcome one as it underscores the ability of an employer to apply an employee’s contractual age where working beyond that age would have a negative effect on successional planning and staff retention. However, the decision emphasises the need for employers to be able to objectively justify this based on the specific circumstances within the company.

Neil O’Brien, Employer Relations Executive, Ibec Knowledge Centre