WRC Awards €25,000 for Age Discrimination Following Mandatory Retirement
A recent Workplace Relations Commission (WRC) decision highlights the importance of having clearly documented and objectively justified retirement policies, following a finding of age discrimination against an employer who required an employee to retire at 65.
The WRC awarded €25,000 in compensation to a former employee of Park Inn by Radisson Shannon Airport after finding that he had been discriminated against on the grounds of age when his employment ended following a one year post-retirement fixed-term contract.
The decision is an important reminder that employers cannot simply rely on an established retirement age or company policy when requiring employees to retire. Retirement arrangements must be clearly communicated, properly documented and objectively justified in accordance with Irish employment equality legislation.
Background to the case
The employee, Rajamohan Pillay, commenced employment with CG Hotels Limited, trading as Park Inn by Radisson Shannon Airport, in April 2011.
He worked as a Food and Beverage Assistant and had been employed on a permanent basis for almost 13 years before reaching the company's stated retirement age of 65 in January 2024.
The employer informed the employee that he would be required to retire at 65. However, he was offered the opportunity to continue working for a further 12 months on a fixed-term contract, allowing him to remain in employment until he reached 66 and qualified for the State Pension.
The employee accepted the arrangement and continued working until January 2025. However, when he requested a further one year extension to his employment, the employer refused, confirming that the company's policy only permitted one post-retirement fixed-term contract.
The employee subsequently brought a complaint to the WRC, alleging that he had been discriminated against on the grounds of age. He argued that other employees had been permitted to work beyond the age of 65 and that he had been unfairly required to retire.
The employer denied the allegations, maintaining that its normal retirement age was 65 and that the employee's post-retirement fixed-term contract had simply expired in accordance with company policy.
WRC decision
The WRC upheld the employee's age discrimination complaint and awarded him €25,000 in compensation.
There were several important factors considered by the Adjudication Officer.
1. The employer could not demonstrate that a retirement age of 65 formed part of the employee's terms and conditions
One of the key issues in this case was whether the employer had established a compulsory retirement age of 65 that applied to the employee.
The employer maintained that its normal retirement age was 65 and relied on a retirement policy which stated that this applied to all employees.
However, the employee's original contract of employment, issued in 2011, did not contain any reference to a mandatory retirement age.
The employer also failed to provide evidence that the retirement policy had been formally communicated to the employee during his employment.
The WRC noted that the policy document provided by the employer was unsigned, undated and did not specifically identify the respondent company. There was also no evidence that the employee had received a copy of the policy before being informed that he was required to retire.
The Adjudication Officer concluded that the employer had failed to establish that a compulsory retirement age of 65 formed part of the employee's contractual terms or conditions of employment, either expressly or through an established custom and practice.
2. The employer could not demonstrate that its retirement policy was applied consistently
The WRC also considered evidence that other employees had continued working beyond the age of 65.
The employee identified two colleagues who had remained in employment until approximately 67 years of age, as well as another former employee who had reportedly worked until the age of 70.
The employer acknowledged that two employees had continued working beyond 65 but argued that their circumstances were different.
The Adjudication Officer was not satisfied that the employer had demonstrated that its mandatory retirement arrangements were applied consistently and systematically.
This was particularly relevant given that the employer had not established that a retirement age of 65 had been properly communicated to the employee in the first place.
3. A mandatory retirement age must be objectively justified
Under the Employment Equality Acts 1998, as amended, age is one of the nine protected grounds on which discrimination is prohibited.
However, employers may set a compulsory retirement age where it can be objectively and reasonably justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.
Examples of legitimate aims can include:
- Succession planning and workforce planning.
- Promoting opportunities for younger employees.
- Maintaining a balanced age structure within the organisation.
- Health and safety considerations, particularly in safety critical roles.
- Supporting intergenerational fairness.
In this case, the employer relied on succession planning and the need to ensure employees were not required to continue working until they were no longer capable of performing their duties.
However, before considering whether these aims justified the retirement age, the Adjudication Officer first had to establish whether the employer had actually put a compulsory retirement age in place that applied to the employee.
As the employer could not demonstrate that a retirement age of 65 formed part of the employee's terms and conditions, it could not rely on the statutory exemption permitting compulsory retirement on the age ground.
4. The expiry of a post-retirement fixed-term contract did not remove the employer's obligations under equality legislation
The employer argued that the employee had not been dismissed but that his fixed-term contract had simply expired in January 2025.
However, the WRC found that the employee had been dismissed due to his age when the employer refused to extend his employment beyond the expiry of the 12 month contract.
The Adjudication Officer concluded that the employee had established a prima facie case of age discrimination and that the employer had failed to rebut this.
The WRC upheld the complaint under the Employment Equality Acts and awarded the employee €25,000 in compensation, equivalent to approximately one year's net salary.
The employee's separate complaint under the Protection of Employees (Fixed-Term Work) Act 2003 was not upheld, as the WRC found that there had been no breach of the legislation in relation to the fixed-term contract.
What does this mean for employers?
This decision highlights the importance of ensuring that retirement arrangements are properly documented, communicated and consistently applied across the organisation.
While employers may have legitimate reasons for setting a retirement age, simply having a policy in place is not enough. Employers must be able to demonstrate that the retirement age forms part of the employee's terms and conditions and that it can be objectively justified.
Employers should consider the following:
- Review employment contracts: Ensure that any compulsory retirement age is clearly included in employees' contracts of employment or properly incorporated through an applicable policy or established custom and practice.
- Have a documented retirement policy: Set out the organisation's retirement arrangements, including the applicable retirement age, the process for employees requesting to work longer and any arrangements for post-retirement fixed-term contracts.
- Communicate retirement arrangements: Ensure employees are made aware of the organisation's retirement policy and any applicable retirement age well in advance of their intended retirement date.
- Ensure consistency: Apply retirement policies fairly and consistently. Where exceptions are made, ensure the reasons are clearly documented.
- Objectively justify retirement ages: Be able to demonstrate the legitimate business reasons for setting a compulsory retirement age and why the arrangements are appropriate and necessary to achieve those aims.
- Manage requests to work longer fairly: Consider requests from employees who wish to continue working beyond retirement age and ensure decisions are based on clear, objective criteria and are properly documented.
Key takeaway for employers
This WRC decision is an important reminder that employers cannot simply assume that a compulsory retirement age is enforceable because it has been an established company practice or is included in an internal policy.
Retirement arrangements must be clearly communicated to employees and properly incorporated into their terms and conditions of employment. Employers must also be able to demonstrate that any compulsory retirement age is objectively justified by a legitimate aim and that the means of achieving that aim are appropriate and necessary.
The fact that an employee has been offered a post-retirement fixed-term contract does not automatically remove the employer's obligations under equality legislation.
With changes to retirement legislation and the introduction of additional protections for employees wishing to work until State Pension age, it is more important than ever for employers to review their retirement policies and ensure they are up to date and legally compliant.
For advice and support on reviewing employment contracts, retirement policies and managing requests to work beyond retirement age, contact MSS The HR People at info@mssthehrpeople.ie or call 01 887 0690.
