Direct and Indirect Discrimination in the Workplace Regarding Retirement
It is now a legal obligation for employers to address the issue of retirement.
Employers should pre-empt age discrimination by reviewing all policies and procedures in the workplace. All policies and procedures must be justified as a proportionate measure in pursuing a legitimate aim of the business.
Where there is no justification for retiring an employee at their contractual retirement age, this leaves employers wide open to claims of direct discrimination.
Claims of indirect discrimination can occur where, although the employer’s actions do not specifically target older workers, they have a more negative impact on older employees than on younger staff.
Section 34(4) of the Employment Equality Act 1998, as amended by the Equality (Miscellaneous Provisions) Act 2015, states that
“…it shall not constitute discrimination on the age ground to fix different ages for retirement (whether voluntary or compulsory) of employees or any class or description of employees if it is objectively and reasonably justified by a legitimate aim, and the means of achieving that aim are appropriate and necessary.”
This means that in Ireland, employers can agree individual retirement ages for employees, as long as it is justified by a legitimate aim and the means of achieving this aim are necessary and proportionate.
As a result, many employees are concerned about the increasing state pension age, and the resulting period between their contractual retirement age and the state pension age. Many are forced to work beyond the contractual retirement age to bridge this gap.
Conversely, many employers worry about age discrimination claims; for safety critical employment, a mandatory retirement age is more easily objectively justified, given that the role may require a certain physicality. An earlier retirement age may be necessary to protect the health and safety of employees and customers.
However, it is more likely that a compulsory retirement age regarding sedentary employment will be found not to be objectively justified, and in breach of the Employment Equality Act 1998.
It is vitally important, for all types of employment, that employers have a clear retirement policy setting out the retirement age and the objective justifications for a compulsory retirement age. This will protect against age discrimination claims, and allow employees to plan for their future.
Justifying a Contractual Age of Retirement
In order for a mandatory retirement age to be objectively justified, the employer must be able to answer the following:
- Do the measures seek to achieve a legitimate aim? Examples which do not fall within the category of a ‘legitimate aim’ include cost reduction and improving competitiveness.
- Is the aim legitimate in the particular circumstances of their business, rather than with regard to the particular individual?
- Are the means of achieving the aim proportionate? Are other, less discriminatory measures possible?
Examples of objective justification include:
- The creation of a balanced age structure in the workforce;
- Motivation of younger employees by creating promotional opportunities;
- Workplace safety concerns;
- Public safety concerns.
Employees Seeking to Stay on Past Retirement Age
It is important for an employer to think carefully about certain issues which may arise when considering a request to remain past contractual retirement age:
- Is it safe for the employee to continue to carry out the work in question beyond contractual retirement age?
- Is there a custom and practice of allowing employees to work beyond the contractual retirement age? If other employees in similar roles have been allowed to work beyond the contractual retirement age, this may undermine an employer’s retirement policy.
- Are there any pension implications or implications for employee benefits if the employee stays on?
Fixed Term Contracts Issued Post Retirement
Where an employee is offered a fixed term contract after their retirement, under the Equality (Miscellaneous Provisions) Act 2015, employers are required to objectively justify offering a fixed term contract as opposed to allowing the employee to continue working under their previous contract.
Where a fixed term contract is renewed and, as a result, the duration of the contract exceeds 4 years, it will become a contract of indefinite duration. On expiry of such a fixed-term contract, the employer must also objectively justify a decision not to renew the fixed-term contract.
Recent Age Discrimination Legal Case
The general principle prohibiting discrimination on grounds of age is expressed by the Employment Equality Framework Directive.
In the recent CJEU case of Ajos A/S v Estate of Karsten Eigil Rasmussen, the domestic law of Denmark was applied to Mr Rasmussen, namely that:
“No severance allowance shall be payable if, on termination of the employment relationship, the employee will receive an old-age pension from the employer and the employee joined the pension scheme in question before reaching the age of 50”
Upon termination of his employment at 60, he took up work with another employer and his private sector employer refused to pay a severance payment.
As Mr Rasmussen was not a state worker, he could not rely on the Framework Directive being directly applied to his situation. The CJEU has however ruled that domestic courts must interpret the domestic laws so as to give rise to the protections under the Directive.
The CJEU held that the general principle prohibiting discrimination on grounds of age must be interpreted as precluding, including in disputes between private persons, national legislation which deprives an employee of entitlement to a severance allowance where the employee is entitled to claim an old-age pension from the employer, regardless of whether the employee chooses to remain on the employment market or take his retirement.
Therefore, retired private sector employees can rely on the Directive.
NOTE: This article is for information purposes only; specific legal advice should be taken before relying on information in this article.
If you are an employer seeking advice regarding age discrimination in the workplace, or if you are an employee in need of assistance in relation to your rights regarding age discrimination, we would be delighted to assist you; contact us at 021- 425184 or via our contact form.
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