A changing age demographic, economic necessity, the pension pay gap and changes to the State Pension age have meant that many people will want to continue working past the traditional retirement age of 65. The Workplace Relations Commission (WRC) has, in consultation with various interest groups, prepared a Code of Practice (Code) setting out best practice for employers on how to engage with employees in the run up to retirement age.
The Code provides guidance to employers on:
- Maximising the skills and experience of older employees
- Objectively justifying retirement
- Retirement arrangements
- Managing requests to work beyond retirement age
Maximising the skills and experience of older employees
The Code sets out examples of measures that can be taken by employers to maximise the skills and experience of older employees such as:
- Training management on age diversity and its benefits
- Encouraging the sharing of knowledge and experience to utilise the skill and experience of employees of all ages
- Ensuring that age bias does not exist in policies and procedures
- Fostering a culture of appreciating the need for training and development for employees of all ages
Objectively justifying retirement
From a legal perspective, the setting of mandatory retirement ages will not constitute age discrimination once it can be objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.
The Code provides guidance in relation to the type of factors that might constitute a legitimate aim, such as:
- Intergenerational fairness
- Motivation of employees by providing increased prospects of promotion
- Health and safety
- Creation of a balanced workforce in terms of age
- Personal and professional dignity
- Succession planning
In addition, an employer can offer a fixed term contract to an employee who has reached mandatory retirement age. This will not constitute age discrimination if the giving of a fixed term contract is objectively and reasonably justified by a legitimate aim and the means of achieving that aim are proportionate and necessary.
The Code sets out guidance for employers on how to approach retirement arrangements with employees such as:
- 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
- Providing supports such as, pre-retirement courses, flexible working arrangements and/or counselling to facilitate the transition to retirement
- Providing clear information to employees on retirement procedures, both at recruitment stage and at regular intervals during employment
The Code indicates that, in order to facilitate planning on both sides, it is good practice for an employer to notify an employee in writing of its intention to enforce a contractual retirement age, where one exists, six to 12 months in advance of the date. The Code recommends that this initial written notification be followed up with a face-to-face consultation.
Requests to work longer
The Code states that requests to work beyond a contractual retirement age should be considered carefully by employers and that the following issues be considered by the employer:
- Grounds on which the request should be accepted or refused
- The factors that are impersonal to the employee
- The contractual form any extensions might take
- Whether flexible working arrangements are more appropriate in the circumstances
The Code also sets out a recommended procedure for dealing with requests to work beyond a contractual retirement age which can be summarised as follows:
- Requests should be made in writing at least three months in advance of the retirement date
- An individual consultation meeting should follow the written request
- The employer’s decision should be communicated in writing to the employee as soon as reasonably practicable following the consultation meeting
- If the decision is to grant the request, it should be clearly stated in the decision letter that the decision is based solely on the individual case made by the employee. It must state that the decision does not have universal effect. This is to minimise the risk of other employees seeking to rely on an implied contractual right to work beyond retirement age on the basis of custom and practice
- If the decision is to refuse the request, the decision should be communicated to the employee in a meeting, at which the employee may be accompanied by a witness or representative. Emphasis should be placed on factors that are impersonal to the employee. The employee should also have access to an appeals procedure.
The Code provides some welcome guidance for employers to assist them in dealing with issue of retirement.
The standards set out in the Code are likely to become the benchmark against which employers will be measured in the context of disputes that arise in relation to retirement.
Employers should familiarise themselves with the Code and update their policies and procedures accordingly.
For further information on how best to implement the Code into your company’s procedures and policies, please contact a member of our Employment & Benefits team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.