As an employer, you set out the retirement age for employees in your organisation. However, sometimes the occasion does arise when your employee may enquire if they can work beyond their contractual retirement age.
When this occurs, how do you as an employer respond?
In this article, Sarah Coughlan discusses your legal requirements and guidelines for the best approach.
Firstly, why are people choosing to work beyond the traditional retirement age of 65?
- People are living longer and wish to extend their careers as they enjoy their work and wish to keep their minds active.
- The rise in qualification age for the state pension from 65 to 66 years. This is set to rise again in 2021 to 67 and in 2028 to 68. This change means that there will be a gap between contractual retirement age and eligibility for a state pension. If no occupational pension is in place these employees will have to avail of jobseekers allowance to bridge the gap.
- Maturation date of personal pension might be later than the contractual retirement age.
Are employees obliged to comply with the terms of their employment contract?
Even if the contract says the retirement age is 65 there is new legislation which says that the employer must now objectively justify the retirement. This legislation is contained in the amendment to section 34(4) of the Employment Equality Act. This amendment provides that where a fixed retirement age exists in a contract, the chosen age must be capable of being objectively justified by a legitimate aim and the means of achieving that aim must be appropriate and necessary.
What is meant by a ‘legitimate aim’?
Examples of what might constitute a legitimate aim by an employer may include:
- Intergenerational fairness
- Motivation and dynamism through increased prospect of promotion
- Health and safety
- Creation of a balanced age structure in the workforce
- Personal and professional dignity (avoiding capability issues with older employees)
- Succession planning
There is really no justification for the employee to retire – what now?
Arrange a meeting with the employee and try to establish their intentions. There may be flexible working options or alternative roles. You can offer a fixed term contract and agree to review the situation at the expiry of that term. If you cannot objectively justify the retirement then you risk exposure to a claim for age discrimination so it is prudent to make accommodation.
Guidelines for Employers
To avoid confusion in this tricky area, the WRC developed a useful Code to which employers should refer for guidance. The Code outlines a best Practice for employers under the following headings:
- Utilising the skills and experience of older workers.
- Objective justification of retirement
- Standard retirement arrangements
- Requests to work longer
The code can be found here and sets out a useful procedure to be followed when an employee has made such a request. Employers would be wise to have a clear and consistent policy on retirement age to ensure that they do not face potential exposure to a claim for compensation on the basis of age discrimination.
For more information on this topic, contact Sarah Coughlan: firstname.lastname@example.org
ARTICLE BY: SARAH COUGHLAN