HORIZON SCANNING – CONTRACTUAL RETIREMENT AGES

Current Legal Position

In Ireland, there is currently no statutory mandatory retirement age (with the exception of certain workers in the public sector).  In the private sector, a retirement age is generally set in a contract of employment.

A mandatory retirement age will not constitute age discrimination if: –

• it is objectively justified by a legitimate aim and
• the means of achieving that aim are reasonable, appropriate and necessary.

In the Supreme Court case of Mallon v The Minister of Justice, Ireland and The Attorney General, the Court clarified that provided an overarching retirement age meets the requirements above, it is lawful and there is no need to conduct an individual assessment to apply that retirement age to each employee.

Changes by Employment (Contractual Retirement Ages) Bill, 2025

The Pensions Commission prepared a report which recommended alignment of contractual retirement ages with the State pension age which is currently set at 66 years of age. This recommendation has led to the Employment (Contractual Retirement Ages) Bill, 2025 (“the Bill”).  The Bill has now passed through both Houses of the Oireachtas and will now go to the President to be signed into law shortly.

The Bill’s objective is to permit, but not compel, employees to stay in work until they reach the State pension age, which is currently 66, even if their contract of employment provides for an earlier retirement age. The aim is to balance employee choice with employer’s operational needs.

The fundamental purpose of the Bill is to allow an employee to notify their employer that they do not consent to retiring at their contractual retirement age and sets out a process for notification.

The Bill, once enacted, will apply to an employee who has completed their probationary period and whose contract of employment specifies a contractual retirement age that is less than pensionable age.  The Bill specifically provides that it does not apply to employees who are subject to a maximum retirement age or maximum service limit required by law.

Procedure for Employees who do not consent to retire at contractual retirement age

If an employee does not consent to retire at the contractual retirement age (if less than the State pension age), they must: – –

• notify their employer in writing not less than three months but not more than one year before the employee reaches the contractual retirement age; or

• comply with the employer notification period provided it is not more than six months.

Employer Response

On receiving notification from an employee that they do not consent to retire, the employer shall not enforce the contractual retirement age unless the retirement age is objectively and reasonably justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.

Where an employer intends to enforce the contractual retirement age based on those justifications, they must provide a reasoned written reply to the employee setting out the justification and this must be provided to the employee within one month of receiving the employee’s notification.

If the employer does not enforce the contractual retirement age by providing a reasoned written reply within the timeframes specified, they cannot retire the employee before the employee consents or the date on which the employee attains the pensionable age, whichever occurs first.

Employee Protection

There are protections against penalisation of an employee for having exercised, or proposing to exercise, any of their rights under the Act.

If there is any contravention of the Act, the WRC can order reinstatement, re-engagement or compensation that is just and equitable but cannot exceed the greater of 104 times the weekly remuneration or €40,000.

If an employer’s conduct violates both the Bill (once enacted) and the Employment Equality Acts, an employee will have to elect which route to pursue and and cannot be granted relief under both the Bill (once enacted) and the Employment Equality Acts.

An employer who without reasonable cause fails to provide an employee with a reasoned written reply is also guilty of an offence.

One Step Further than Mallon?

One part of the Bill appears to be inconsistent with the decision in Mallon (mentioned above).

In that case, the Supreme Court determined that an employer is not required to justify the application of an overarching retirement age to an individual employee.  The Supreme Court commented that such a requirement would substantially negate the benefit of having such a rule in the first place.

However, the Bill requires the employer to write to the employee justifying “the retirement of employee concerned at his or her contractual retirement age [..]” [Emphasis added].  This appears to impose a higher burden on the employer, requiring it to individually justify the retirement age to the employee concerned when trying to enforce a contractual retirement age which is less than the State pension age.

Employer next Steps

• Consider the potential application of Bill (once enacted) to your organisation and whether anyone is approaching the contractual retirement age (which is less than State pension age) in 2026;
• Review contractual retirement ages and unless there are clear reasons for the imposition of a retirement age of less than the State pension age, consider aligning the contractual retirement age with the State pension age;
• If retaining a contractual retirement age that is less than the State pension age, update the Company retirement policy to take account of the Bill to be rolled out once the Bill is enacted.