Is it time to retire the mandatory retirement age?

Out with the old and in with the new? With a society that is getting older, the issue of the mandatory retirement age has been on the agenda of legislators for some time now.

The Government dealt with the matter through the Equality (Miscellaneous Provisions) Act 2015, which came into effect on January 1st. It means employers can now only set a mandatory retirement age in circumstances where it is “objectively and reasonably justified by a legitimate aim”.

Marc Fitzgibbon, who heads the employment law group at Lavelle Solicitors in Dublin, says it is likely the objective justification will be “loosely interpreted” and “could be open to abuse” by some employers. “The succession planning justification is very loose,” he says. “I think it will be loosely interpreted and employers will take advantage of the standard of objective criteria being quite loosely applied.”

In terms of what constitutes “objective justification”, succession planning, which is when employers make room for younger people coming through, and physical impediments are among the typical reasons put forward.

“Things like good succession planning are a legitimate basis to justify it, or promotion on inter-generational fairness grounds,” says Fitzgibbon. “Another would be if there were physical obstacles to continuing. So it doesn’t abolish it in reality.

“If an employee requests to work beyond their retirement age, the employer can, in response to this, offer them a fixed-term contract, but this too must be objectively justified.”

He added it was “inevitable” that there would be an increase in the number of age discrimination claims coming before the Workplace Relations Commission and the courts.

Age Action Ireland spokesman Justin Moran says there is “no evidence” to support the succession theory. “There is no connection between having mandatory retirement and creating new employment,” he says.

“There’s no economic evidence to support that. If you look at Iceland, it has the highest participation rate for older workers. It also has the highest participation rate for younger workers, so an artificial link is being created there. It simply doesn’t exist.”

Moran says mandatory retirement can have a seriously detrimental effect on individuals, both from an economic and a social exclusion point of view.

“It became an issue for us when we had increasing numbers of people contacting us who were beginning to realise the income they were going to have in retirement was not going to be what they expected it to be,” he says. “Our position is that if people are capable of working and they want to work, they should be facilitated in doing that.

“For a lot of older people, they have friends and colleagues in the workplace. If they are forced out of their jobs, especially when they have been working there for a long period of time, they lose that social connection.

Challenge

“It’s also a challenge to their sense of self worth and self confidence. A lot of people get very upset with the suggestion that when they turn 65 they are no longer able to work and are told to go. It’s a real blow to many older people emotionally.”

The Republic currently has a comparatively young population, but that is changing rapidly, and Moran estimates that by 2046, there will be almost 1.5 million people over the age of 65.

“If you’re going to have a workforce that’s older, you need to be able to support it,” he says. “That includes dealing with mandatory retirement, and also dealing with older workers who are seeking jobs.

“Certainly our experience is that people in their 60s find it very hard to find work because they are seen as older workers. We need to deal with the fact that the demographics are changing.

“We need to facilitate those older workers who want to continue working, who are paying taxes, and want to continue contributing to the economy. We need to find ways of enabling them to do that.”

In terms of what might be done to achieve that, Moran says there are a range of measures that would be introduced.

“We need to look at training opportunities to enable them to move into new areas of work,” he says. “We also need to look at accommodating flexible working issues where people might be allowed to work fewer days in the week.

“Look at the roles they’re doing. They could be used as trainers or mentors to bring on the next generation of workers who are in their 30s or 40s and they benefit from the experience and the wisdom of the older workers.”

IBEC director of employer relations Maeve McElwee believes the age at which people retire “will need to move up” as society ages, but argues the employer’s ability to set a contractual retirement age “still remains very important”.

“There are issues around retention of younger people who have expectations of moving up and being able to further their careers,” she says. “They potentially could find themselves stuck when the more senior promotion opportunities aren’t coming up with any regularity or predictability. If people aren’t retiring and we can’t have a line of sight in terms of planned retirement, then that will have an impact on youth unemployment.

“Obviously there are advantages to being able to retain people who are skilled and have experience. There are significant benefits for employers as well in terms of keeping people on, but it has to be done in the context of being able to justify what the retirement age is, and to ensure the reasons for that are objectively justifiable under the requirements that are set down in the equality legislation.”

McElwee adds it is “absolutely the case” that older workers have “huge amounts” to offer as employees and says criticism of a mandatory retirement age as being discriminatory is unfounded.

“I don’t necessarily think it’s discriminatory to have a contractual age at which you have agreed with your employees that they will be leaving,” she says. “As long as it’s handled appropriately and with sufficient notice, I don’t see it that way.”

Angela Gallagher was forced to retire her job with the Revenue Commissioners in 2013 at the age of 65. She says it was difficult to pay off her mortgage after her pension was cut during the recession.

“I wanted to stay on at least until I finished paying off my mortgage, but that didn’t happen,” she says. I was employable on the Monday but not on the Tuesday. Losing my job was not going to be affordable.

Trauma

“Apart from the social trauma of losing my job, I had all this going on in relation to paying my mortgage. It was pretty grim. I had to cut back. I was glad to eat beans on toast a few days a week. It was literally that bad, which was shocking.

“I didn’t know what I was going to do because I had no savings. It was a harrowing experience, but I got through it thanks to the credit union. They were very supportive of me because I had been with them for years.”

Despite paying her mortgage, Gallagher was forced to sell her home as she could not keep up with the cost of maintenance.

“We got the mortgage paid off, but then I couldn’t afford to live in my house,” she says. “With the maintenance and all the extras now, I just had to sell it. This is at a time when I am feeling healthy enough and able enough and intelligent enough to work. I hadn’t really slowed down at all.

“The social exclusion is one side of it, but the financial hardship and the worry of it at that time of life was tough. There was no way out of it. You were unemployable. Once you’re over a certain age, nobody wanted to know you. Employers don’t seem to think you have any value once you reach a certain age.”