The grey ceiling – the right to work beyond 65
The huge deficit in both public and private sector pension schemes means that it is now a reality that many people will have to work beyond the age of 65 (the traditional age of retirement in Ireland) in order to avoid the poverty line. In these circumstances what right does an employee have to break the grey ceiling and continue working into his/her golden years?
Currently, there is no compulsory retirement age in Ireland. For those working in the public sector, certain statutory retirement ages may apply. Since 2004 there is no normal retiring age for the Civil Service. For all other employees, the Employment Equality Acts 1998-2007 provide Irish employers with discretion on fixing compulsory retirement ages. This means that if a contract of employment includes an express retirement age clause, the employer can under the legislation rely on this as a defence to an age discrimination claim. If however the employee works beyond this date, or if there is no express contractual retirement age, there is a strong argument that any attempt to arbitrarily retire an employee would be deemed discriminatory on grounds of age. If a successful claim is brought by the employee he/she would be entitled to receive an award of up to 2 years gross remuneration.
The issue of whether the imposition of a mandatory retirement age is permitted under EU law is the subject of recent litigation and the EU case law may strengthen the rights of employees to work beyond the traditional retirement age. This may lead to a challenge to the legality of the existing Irish retirement provsions.
In the 2007 case of Palacios de la Villa –v- Cortefiel Servicies SA, the European Court of Justice (“the ECJ”) held that compulsory retirement clauses set by law were discriminatory on grounds of age and could only be objectively justified in certain circumstances. The Irish High Court has approved the Palacios decision and the Irish Labour Court has indicated that the current position in Ireland may have to be revisited.
The Palacios decision was again confirmed by the ECJ in March 2009 in the UK “Heyday” case. Heyday, an offshoot of Age Concern England, a charity which promotes the welfare of older people, brought a claim against the Secretary of State for Business Enterprise and Regulatory Reform challenging a provision in the UK Age Discrimination Regulations. The Regulations provide that a fallback mandatory retirement age of 65 is implied into every contract of employment, which does not contain a retirement age, thereby forcing people to retire at 65 years of age. The ECJ held that it is lawful to impose mandatory retirement ages in National legislation but has referred the matter back to the English High Court to determine whether this provision can stand up to the test set out in Palacios i.e. that it can be objectively and reasonably justified as achieving a legitimate aim. The UK government must now establish why compulsory retirement ages are needed, and the justification must be based on social or labour market needs, not the interests of employers.
The postion taken by the ECJ strengthens the possibility of a successful challenge to current Irish legislation, particulary in an industry sector where it may be difficult for an employer to justify the reasons for selecting a certain retirement age. Given the real need for people to work beyond what was traditionally deemed an appropriate retirement age this challenge is now unavoidable. The right to work beyond age 65 is guaranteed to be the subject of much debate and legal challenge going forward.
For further information, please contact Carol Fawsitt, Partner cfawsitt@hayes-solicitors.ie or Anne Lyne, Associate alyne@hayes-solicitors.ie