Employment Law Update - How does an Employer Objectively Justify a Mandatory Retirement Age?
01 July 2016
Employers can establish a mandatory retirement age for employees but such ages must be capable of being reasonably and objectively justified if they are challenged by employees as being discriminatory on grounds of age. We review criteria considered in case law which employers can rely on to demonstrate that the setting of a retirement age is objectively justified.
Employers often question what constitutes objective justification of a retirement age as there is no clear statutory guidance on this point. Instead, many of the objective justification ‘tests’ have been set out in case law both from the Irish court and the Court of Justice of the European Union.
Ideally, in advance of setting a mandatory retirement age, or reviewing a mandatory retirement age already in place, employers should consider the criteria for objective justification considered in recent case law, with a view to determining if it is capable of being objectively justified.
1) Health and safety concerns
Courts have found it justifiable to have mandatory retirement ages for employees who work as drivers, pilots and in jobs which are physically demanding. However not every working environment carries with it the same risks to health and safety. Therefore an employer would need to be in a position to demonstrate by way of a hazard identification and risk analysis exercise that they have evaluated their particular work environment in setting a mandatory retirement age, rather than simply following a historically established retirement age. This is particularly relevant in places of work where technological innovations might have resulted in work becoming less physically demanding.
2) Succession planning
Employers need to plan for the future in order to ensure that they have the right people in place with the requisite skill sets and experience to support the activity of the organisation at a future point in time. Mandatory retirement ages have been held to promote this aim by facilitating the retirement of older employees which opens up opportunities for younger employees who may have differing skill sets and experience.
3) Establishing an age balance in the workforce
Mandatory retirement ages when used to establish a balanced level of experience in an organisation has been found by courts to be objectively justified because it provides an organisation with a wider mix of skill and experience and allows for the recruitment of people with newer and differing skill sets and experience.
4) Encourage the recruitment and promotion of younger people
Courts have accepted arguments from employers that a mandatory retirement age was necessary to encourage employees to stay with, and progress within an organisation and to motivate employees by the prospect of being promoted into more senior roles.
Terminating the employment contracts of employees who have reached retirement age makes it easier for other workers to find work. This justification can be supported by national employment policies such as stimulating the labour market, reducing unemployment and vocational training objectives.
Employers should note that in determining if a mandatory retirement age is discriminatory on the age ground that Courts approach each matter on a case-by-case basis. Courts look to the requirements and circumstances of each organisation when determining if a mandatory retirement age constitutes age discrimination. Therefore, employers should be able to demonstrate that they considered their individual mandatory retirement age carefully, taking into account the particular requirements of their own organisation and the roles carried out by their employees in order to objectively justify a mandatory retirement age.
For more information, please contact a member of our Employment team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.