A Labour Court decision in 2017 highlights the importance of specifying the retirement clause in employment contract. The Court found that dismissing an employee on the basis on their age was an act of discrimination.
In the case, an employee worked as a senior bartender from 1991 until his dismissal. He was originally employed by another company and later transferred to the employment to another employer in 2003.
The employees contract with his original employer did not include a retirement age. In 2006, nearly three years after the transfer, following negotiations between management and the union, the employee was issued with a new contract of employment. This contract did not specify a retirement age either.
According to the claimant, it came as a complete surprise to him when he was informed that he would be retiring in January 2016 on his 65th birthday. The claimant argued that, due to the increase in the age of receipt of the state pension from 65 to 66 years, there was still a requirement on him to be available for work and that there was no justifiable objective reason for the employer to terminate his employment. He also argued that no legitimate aim or objective could be served by not allowing him to remain in work until he reached 66. The claimant pointed to two employees who had remained in employment following their 65th birthday.
The employer argued that the age of retirement of 65 years was justified within the meaning of section 34(4) of the Act and article 6 of European Directive 2000/78/EC “Establishing a General Framework for Equal Treatment in Employment and Education” (the “Directive”) and that the means chosen by the respondent were both appropriate and necessary for achieving that aim. It argued that it was an express term and condition of the claimant’s employment that his employment would not continue past his 65th birthday. The employer contended that it had one universal retirement age for all of its staff, ensuring consistency amongst all of its employees and creating certainty and succession planning.
The employer argued that, although the contract did not contain a mandatory retirement clause, such a clause should be implied as it had been the accepted custom and practice of the employer since 1986 for employees to retire when they reached the age of 65, except in the most limited and exceptional circumstances. It argued that exceptional circumstances had applied in the case of the two employees who had worked beyond their 65th birthdays.
Section 34(4) of the Employment Equality Act 1998 allows an employer to fix a retirement age without contravening the prohibition of discrimination on grounds of age. Article 6(1) of the Directive provides that difference of treatment on grounds of age shall not constitute discrimination, only where it is objectively and reasonably justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.
The Labour Court found that there was no express term in his conditions of employment requiring the claimant to retire at the age of 65, noting that the employer had numerous opportunities to include such a provision. The Court found that the employer had not provided any evidence to demonstrate that the claimant had been informed of the retirement age or provided with any documentation from which this could be discerned. The Court did not accept that a retirement age of 65 had been implied or incorporated into the claimant’s contract of employment.
The Court held that the employer had not fixed a retirement age and that the claimant had been dismissed because of his age. In view of this, there was no requirement for the Court to consider any of the employer’s arguments of objective justification for a retirement age of 65. The complainant was awarded a sum of €6,500 for the effects of the act of discrimination, having clarified to the court that he did not seek reinstatement.
Employers should ensure that contracts of employment include a provision in respect of retirement. Employers should have a clearly thought out rationale for specifying the retirement age. Where no retirement age is specified and an employer seeks to rely on custom and practice, it will be very difficult for the employer to defend a claim of discrimination if an employee can point to other employees who have remained in employment beyond that age.
For further information on staff contracts call the experts in HRP Group on 01 676 0006