Forced retirement is the forgotten frontier

The recent case of a nurse who received €85,000 in compensation from the Workplace Relations Commission after being forced to retire at 66 is a timely warning that forcing employees to retire is discriminatory. So what can employers and employees do?

Forced retirement is discrimination under the Employment Equality Acts and is an egregious breach of employment rights. Picture: iStock

The Workplace Relations Commission ruled recently that a nursing home must pay €85,000 to a senior staff nurse for age-based discrimination, something which should act as a wake-up call to employers who enforce a similarly arbitrary retirement age. 

Forced retirement is discrimination under the Employment Equality Acts and is an egregious breach of employment rights. It has a material impact not only on the finances of older workers but also on their physical and mental health.

Age discrimination arises where a person is treated less favourably than another person by reason of their age. Age is a protected ground under the Employment Equality Acts 1998-2015.

Perhaps surprisingly, age discrimination has become more prevalent. According to the Workplace Relations Commission's annual report, age-related discrimination is the most common type xof discrimination reported. 

Covid-19 has impacted upon on age discrimination, and has a part to play in the increase in these cases. Factors such as people over the age of 70 having to cocoon, and the onset of remote working, coupled with the difficulties some people who are older face in relation to the technology skills required for this type of working has driven the unfavourable treatment of older people in the workforce.

It is important to understand the background to these claims.

Many older workers simply cannot afford to retire

Many older workers simply cannot afford to retire. Some still have a mortgage or children to educate. Others will not have the financial resources to have a productive retirement. A second group are those who feel both physically and mentally capable of continuing to perform their job. Many workers in their 60s will see themselves as still being entirely capable of workplace productivity.

Forced retirement can have a negative impact on both the physical and mental health of older workers. There can be a real fear of moving from an active to a sedentary lifestyle, especially for those who do not have a range of hobbies. For others, there can be a real fear of being perceived as no longer capable of performing a job they know that they are capable of performing.

Arbitrary retirement age is a historical leftover

Many employment contracts automatically have a 65 years of age retirement date. This is an arbitrary age. It goes back to a time when pensions were first introduced and when reaching 70 years of age was a major milestone. Now , as we live longer and maintain better health, the arbitrary 65 years of age is now being challenged successfully.

Where employers have a fixed retirement age, they must be able to objectively justify this. Simply saying a person has reached a set age and must retire is a recipe for an age discrimination claim which an employee will normally win in those circumstances.

The issue then, is when can an employer legally require a person to retire, and what challenges can an employee who wishes to continue working legitimately raise.

There are three main exemptions for to an employer who is seeking to retire an employee.

• Firstly, an employer can legally retire an employee where they have a clause in their contract of employment that sets out a retirement age and it is objectively and reasonably justified by a legitimate aim, and the means of achieving that aim are appropriate and necessary.
• The second exemption will arise where an employer – if they cannot meet the above exemption – can offer a fixed-term contract to a person where they have a retirement age, but have not set out a justification. However, this fixed term contract must be objectively and reasonably justified and the employee must get independent legal advice on signing away their rights.
• Thirdly, an employer may be in a position to introduce a new retirement age, where none existed previously, or to vary an existing retirement age. However, in order for an employer to do this, this needs to be exercised reasonably. If no such variation clause is in the contract, then the offering of a fixed term contract exceeding the retirement age, will require the informed consent of the employee.

Difficulties arise where an employer cannot meet the objectively and reasonably justified aim, and the means of achieving that aim are proportionate and necessary for the business. This is a complex test. 

However, with appropriate planning and consideration it can be achieved in some cases. For example, the protection of health and safety has been held to be a legitimate aim, but it is not simply enough for an employer to be able to point to this ground. An employer needs to be in a position to produce evidence that this ground impacts on their workplace.

Some employee will hope to continue working for longer. It is important to check the contract of employment for a retirement age, then to check if the retirement age has been justified. Often, no retirement age exists that meets the requirements. 

Impact on pension rights

It is important to consider engaging with the employer. This may mean putting in writing to your employer an age at which you want to retire, and opening up the lines of communication in this way. An employee should try and deal with this situation as early as possible, as retiring may also have an impact on pension rights.

Unfortunately, disputes will arise as regards forced retirement. Where both employers and employees understand the legal rights and obligations around continuing to work and retirement, the potential for litigation is reduced. This type of litigation is always difficult because in most cases the employer and employee will have had a positive working relationship over a long period of time.

Workplace friendships will have been created which can be important for both. Any litigation destroys that relationship. Therefore, as solicitors who advise in this area of law we encourage both employers and employees to understand their legal rights, but also the obligations both have. Where that is done and addressed early, forced retirement litigation can be avoided. 

In some cases, the employee will retire. In others, the employee will be able to demonstrate an entitlement to continue working which an employer will accept.

When issues of forced retirement arise,  mediation should be undertaken in advance of any retirement age that is proposed by an employer, and undertaken by an independent party so as to ensure, as far as possible, that any dispute does not end up in litigation. 

Otherwise, we will see many more of these cases as our population ages healthily and actively. 

• Richard Grogan and Natasha Hand are solicitors at Richard Grogan & Associates Solicitors