Guidance on Mandatory Retirement in light of the Mallon decision

The Employment Equality Acts 1998 – 2015 (“EEA”) transposed the Employment Equality Directive into Irish law and prohibits discrimination on nine grounds, including age. As such, the termination of employment due to age could be considered discrimination unless it falls within Section 34(4) of the EEA (or Article 6 of the Directive) which provides it is permissible to set a fixed retirement age if:

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

MALLON V MINISTER FOR JUSTICE

In Seamus Mallon v The Minister for Justice, Ireland, and the Attorney General [2024] IESC 20 (“Mallon”), the Supreme Court dismissed an appeal brought by the applicant, Mr Mallon, against a decision of the High Court in a judicial review challenge to the mandatory retirement age of 70 imposed on sheriffs by the Court Officers Act 1945.

The Mallon decision has provided clarity on the manner in which the legality of mandatory retirement ages is to be assessed.

Court of Justice of the European Union (CJEU) Jurisprudence

The CJEU has considered the compatibility of mandatory retirement regimes with the Employment Equality Directive on numerous occasions. The Supreme Court identified the legitimate aims that have been recognised by the CJEU in the context of mandatory retirement ages as follows:

• Promoting the employment of younger people and facilitating their entry to the labour market.
• Promoting the access of young people to the professions.
• Establishing an age structure that balances younger and older workers.
• Sharing employment between the generations.
• Improving personnel management by enabling efficient planning for departure and recruitment of staff.
• Preventing possible disputes concerning employees’ fitness to work beyond a certain age.[1]
• Avoiding employers having to dismiss employees on the ground that they are no longer capable or working which may be humiliating for the employee.[2]
• Standardising retirement ages for professionals in the public service.

The CJEU jurisprudence makes it clear that Member States have a wide margin of discretion not only in terms of choosing the legitimate aims they wish to pursue, but also in terms of defining the means of achieving these legitimate aims.

Individual Assessment

Mr Mallon relied on the Donnellan[3] decision to submit that a blanket mandatory retirement age will not be justifiable where individual assessment is possible.

The Supreme Court noted that the post-Donnellan CJEU jurisprudence does not support the aforementioned position. Rather, to the contrary, the avoidance of individual capacity assessment has been recognised as a legitimate aim capable of justifying a general retirement age due to the scope for disputes such assessment necessarily involves and because of its potential impact on the dignity of employees. The Supreme Court stated that:

“It is not the case that the Directive presumptively requires case by case or role by role assessment or that such individual assessment must be shown to be impractical if a generally applicable retirement age is to be justified.”

The Supreme Court clarified that it is reasonable to adopt generally applicable mandatory retirement rules without any requirement for individual capacity assessment. Moreover, the “consistent and systematic” and “coherent” application of such mandatory retirement rules is not only permissible but is an important element of the proportionality assessment under the EEA and the Directive.

 

The Court noted that adopting a generally applicable mandatory retirement age requires consistency. If the employer is inconsistent with applying the mandatory retirement age, it will be difficult to establish that such a retirement age is objectively justifiable (even where the retirement age is a term of the contract).

Financial Hardship

When assessing the proportionality of a mandatory retirement age, the Supreme Court stated that financial hardship would be a key factor. In this case the mandatory retirement age was 70. The Court noted that the retirement age of 70 is higher, and in many cases considerably higher, than the thresholds for mandatory retirement considered without criticism or condemnation by the CJEU and it is significantly higher than the pensionable age for the purposes of the State pension.

CODE OF PRACTICE ON LONGER WORKING[4]

The Code of Practice on Longer Working sets out best industrial relations practice in managing the engagement between employers and employees in the run up to retirement age in the employment concerned.

The Code of Practice states compulsory retirement ages set by employers 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. Examples of what constitutes a legitimate aim by an employer may include:

• 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).
• Succession planning.

 

 

The Retirement Process

In accordance with the Code of Practice, it is good practice for an employer to notify an employee of the intention to retire him/her on the contractual retirement date within 6 – 12 months of that date. This allows for reasonable time for planning, arranging advice regarding people succession, etc. While the initial notification should be in writing, it should be followed up with a face-to-face meeting which should focus on addressing the following:

• 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.
• Assistance around guidance and information.

Request to Work Longer

A request from an employee to work longer than their contracted retirement age should be considered carefully.

In dealing with a request to work longer the Code of Practice recommends that the parties engage as follows:

1. The employee should make such a request in writing no less than three months from the intended retirement date to be followed up with a meeting between the employer and employee. This meeting gives both the employee an opportunity to advance the case and allowing the employer to consider it. It is important that the employee is listened to, and that any decision made is on fair and objective grounds.

 

2. The employer’s decision should be communicated to the employee as early as practical following the meeting.

 

3. Should the decision be to offer a fixed-term contract post-retirement age, the period should be specified, setting out the timeframe, and the legal grounds underpinning the new contract should be made clear (i.e. fixed-term contract). It is good practice to include a reference that the decision is made solely having regard to the case being made by the employee and does not apply universally.

 

4. Where the decision is to refuse the 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. The applicant should have recourse to an appeals mechanism, for example through the normal established grievance procedures in the organisation.

 

5. An employee may be accompanied to a meeting by a work colleague or union representative to discuss a request to the employer to facilitate working longer and in any appeals process around same.

 

KEY TAKE-AWAYS

There are a number of legitimate aims that an employer could use to justify a mandatory retirement age. An individual assessment is not required as long as the mandatory retirement age is proportional and consistently applied. A mandatory retirement age of 70 is much higher than the thresholds for mandatory retirement considered without criticism or condemnation by the CJEU.

The Code of Practice on Longer Working provides best practice to employers on the retirement process. The employer should inform the employee by written notice of their intention to retire him/her within 6-12 months of the date of retirement. This should be followed by a face-to-face meeting. If the worker requests to work longer, than the steps laid out above should be followed.

On the topic of Retirement, Employers should also note the recent changes in Pension Law, with the Automatic Enrolment Retirement Savings System Bill 2024 bring a number of changes. Please see our most recent article here https://www.ofx.ie/auto-enrolment-a-radical-shake-up-of-the-pensions-landscape/

[1] Para 74 Mallon “The avoidance of individual capacity assessment – both because of the scope for disputes such assessment necessarily involves and because of its potential impact on the dignity of employees – has been recognised as a legitimate aim capable of justifying a general retirement age.”

[2]  See above.

[3] Donnellan v. Minister for Justice, Equality and Law Reform & Ors, [2008] IEHC 467.

[4] Industrial Relations Act 1990 (Code of Practice on Longer Working) (Declaration) Order 2017

 

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