Consequently, employers should not pressurise older colleagues into resigning, which includes colleagues who may be eligible for the state pension. Any such pressurising of older colleagues is likely to amount to direct age discrimination.
Compulsory retirement is only a possible option where the compulsory retirement can be objectively justified – for example, where the employer can demonstrate that it is a proportionate means of achieving a legitimate aim. The concept of the legitimate aim is construed very narrowly and any form of direct age discrimination must be justified with reference to an aim of public interest in nature that is consistent with social policy. The concept of legitimate aims in respect of retirement is complex and continues to evolve with case law.
Ireland
There is no statutory mandatory retirement age from employment for private sector employees in Ireland. The Employment Equality Acts 1998-2021 also 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 they can show that the retirement age is objectively and reasonably justified by a legitimate aim and the means of achieving that aim are appropriate and necessary. The retirement age must also be consistently applied. If these criteria are not met, the mandatory retirement age could be seen as discriminatory, and this could prove costly as the Employment Equality Acts provide for compensation of up to a maximum of two years’ remuneration for a successful age discrimination claim.
The Workplace Relations Commission (WRC) Code of Practice on Longer Working sets out a number of legitimate aims for setting a mandatory retirement age including intergenerational fairness, health and safety concerns, motivation and dynamism through the increased prospect of promotion, the preservation of personal and professional dignity by avoiding capability issues with older employees, succession planning, and the creation of a balanced age structure in the workforce.
In Ireland, employees are entitled to the state pension once they reach 66. However, many employers have set their mandatory retirement ages at 65. This gap in a year between retirement and obtaining the state pension age is creating a financial concern for many employees. Due to this and the fact that many employees want to work longer we are seeing mandatory contractual retirement ages being increasingly challenged.
Germany
The German statutory retirement age limit – when an employee becomes eligible for a state pension – is between 65 and 67 years depending on the date of birth of the employee. However, the statutory retirement age is not mandatory and employment contracts do not end automatically when a certain age is reached or at the time the employee is entitled to statutory pension. The receipt of any kind of pension does not constitute a sufficient reason for termination.
The agreement of age limits in the employment contract is, however, generally possible under German law. Age limits are often agreed in employment contracts, collective agreements and works agreements. If such an age limit is effective, the employment relationship ends when the employee reaches the intended age without requiring notice of termination. Section 41 of the Social Security Code VI governs whether an age limit is effective or not.
A transparent and explicit agreement under which the employment relationship is to end with the achievement of the statutory retirement age without termination is generally permissible. If the employment relationship is to terminate at an earlier date, this agreement must be entered into or confirmed within the last three years prior to the intended termination date, and the employee needs to be entitled to an early retirement pension.
An employee whose work is terminated through a contractual age limit is not unfairly discriminated against if they receive a pension from the statutory pension insurance.
France
The French Law 87-588 of 30 July 1987 set out the conditions for employee retirement in France, establishing retirement as an autonomous method of terminating employment contracts, distinct from dismissal or resignation.
The legal regime guarantees employees minimum protection. It also prohibited ‘cut-off clauses’ inserted in collective agreements or employment contracts providing for automatic termination of the employment contract based on the age of the employee.
The termination of the employment contract is only possible if a specific legal procedure is followed and the employer can only retire an employee automatically if they have reached the age of 70. In order to retire an employee under the age of 70, the employer must first obtain their written consent.
Retirement cannot take place before the age at which any employee automatically receives a full pension. This age was set at 65 until 1 November 2016 and will reach 67 in 2023.
In any case, the employee will be entitled to a retirement payment equivalent to the amount of the applicable severance payment and a notice period, plus payment of any unused holiday entitlement.
The Netherlands
For Dutch private sector employees, there is no statutory mandatory retirement age from employment. However, parties may agree that a contract of employment for an indefinite period of time ends by operation of law when the employee reaches the pension age. This is usually the Dutch state pension age but it may be another pension age.
However, agreeing a pension age lower than the Dutch state pension age bears a risk for the employer, given that this is only allowed if the employer can rely on an objective justification in the meaning of the Equal Treatment in Employment (Age Discrimination) Act. To prevent disputes, an employer should clearly follow from the pension dismissal clause to which pension age it refers.
Can employees work past a mandatory retirement age?
UK
Employers may choose to implement compulsory retirement ages for specific roles where there is a proven objective justification for the compulsory retirement age. For example, compulsory retirement can apply in the case of the UK’s Fire Service which has an age limit set by law. In addition, certain jobs within the construction industry which require specific physical abilities may stipulate a compulsory retirement age. Employers are not subject to any duty to consider requests to work beyond a stipulated compulsory retirement age.
The Advisory, Conciliation and Arbitration Service (Acas) has issued guidance to suggest that requests to work beyond a compulsory retirement age should be permitted “if circumstances permit”. Ultimately, it will be for the employer to decide whether it would be appropriate for an employee to be permitted to work beyond the stipulated compulsory retirement age. Employers must be careful with allowing any such requests given that if employees are consistently permitted to work beyond the stipulated compulsory retirement age, that will bring into dispute whether the compulsory retirement age is needed at all.
Employers who are keen to retain the skills and experience of older workers should consider using flexible working practices such as a reduction in hours. As part of an organisation’s diversity and inclusion training colleagues should be encouraged to challenge their unconscious bias about what older workers can and cannot do.
Employers in the UK also need to be mindful of inconsistent treatment, in terms of performance management, between workers of different ages. Some employers shy away from addressing performance concerns with older workers because they are worried about personal or professional dignity at the end of a person’s career and they hope that they will retire soon and that will be an easy fix. The danger with this approach is that, if a younger worker, performing to the same standard is going through a performance improvement process, this difference in treatment may amount to unlawful age discrimination.
Ireland
Irish employers can offer a fixed-term contract to an employee to enable them to work past the mandatory retirement age. However, the offering of the fixed-term contract must be objectively and reasonably justified by a legitimate aim and the means of achieving that aim must be appropriate and necessary. Such requests must be carefully handled as they can dilute the enforceability of the mandatory retirement age. Similar to the UK, if employees are consistently permitted to work beyond the stipulated mandatory retirement age, that will bring into dispute whether the mandatory retirement age is needed at all.
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