How to deal with employee retirement

There seems to be quite a grey area when it comes to retirement and the ability to retire staff. Alan Price of Peninsula Business Services looks into this difficult area of employment law.

Previously if a company had a compulsory retirement age, you could safely rely on section 34 (4) of the Employment Equality Acts to retire employees.

However from recent case law, the Equality Tribunal makes it very clear that employers can no longer rely on this defence alone. They must also be able to objectively justify a compulsory retirement age. This is further supported by the Retirement Bill, due to be introduced.

A question that always comes up is: “Why can’t I retire someone who has reached retirement age. Why should I have a retirement policy in my contract if I can’t retire an employee”.

Prior to the introduction of the Retirement Bill, having consideration to recent case law, Tribunals look for the objective grounds to retire the employee, not just the presence of the retirement clause in the company handbook.

Examples of the reasons to justify retirement have included health and safety reasons, or where the retirement would increase the prospect of promotion to other staff below the person’s grade.

A further question that always comes up is: “What if I want to keep the employee in work for a period after they hit the retirement age can I then retire them after this?”

For this we can look at the outcome of McGuinness v Maynooth Mission to China Inc, t/a Columban Missionaries case, where the equality officer ruled that “offering a fixed term contract to a person over the compulsory retirement age […] shall not be taken as constituting discrimination on the age ground”.

What the ruling means

The ruling above gives the employer the opportunity to discuss the retirement with the employee, offer a fixed term contract and possibly terminate this fixed term contract at the end of the term. An example of justification for this could include offering a fixed term contract for the duration of the replacements training and handover period.

Alan Price Peninsula

Alan Price (left) is senior director for the employment law consultancy, Peninsula Business Services; managing director of Peninsula Ireland; and elected director and trustee for the Chartered Institute of Personnel and Development – CIPD. Price also sat for four years as a board director at The Chambers of Commerce Ireland.