Litigating when an employee is dismissed on reaching retirement age
Section 34 of the Employment Equality Act 1998 (EEA) makes it not unlawful on the age ground for an employer to fix retirement age and there is no qualification in the Act as to what criteria the employer may use to fix retirement ages. This has now been amended by the Equality Act 2015 which requires any retirement age set to be objectively justified by a legitimate aim and the aim is appropriate and necessary.
Section 2.1 of the Unfair Dismissal Act 1977 (UDA) excludes dismissal of an employee who has reached normal retirement age.
Much of the Irish case law concerns the question of whether the employee was dismissed on reaching a fixed retirement age. For instance in McCarthy v. Calor Teoranta 2008 ELR 42 the Labour Court held that the dismissal was discriminatory under the EEA on the basis that the claimant was dismissed at age 60 and the normal retirement age was found to be 65.
Under EU law, it is contrary to Directive 2000/78/EC (which forms the basis for age discrimination law in this jurisdiction) to dismiss for retirement age unless the requirements of either Article 2.5 or 6.1 are met :-
“2.5 This Directive shall be without prejudice to measures laid down by national law which, in a democratic society, are necessary for public security, for the maintenance of public order and the prevention of criminal offences, for the protection of health and for the protection of the rights and freedoms of others.
6.1 Notwithstanding Article 2(2), Member States may provide that differences of treatment on grounds of age shall not constitute discrimination, if, within the context of national law, they are objectively and reasonably justified by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary…”
There is a body of ECJ case law around whether the requirements of A.2.5 or 6.1, outlined above, are met.
In Félix Palacios de la Villa v Cortefiel Servicios SA Case C-411/05 the ECJ held that the requirements of Article 6.1 were met. The mandatory retirement age of 65 if (as in that case) was objectively and reasonably justified – retirement age was used to reduce unemployment among the under 65’s.
In Petersen v Berufungsausschuss für Zahnärzte für den Bezirk Westfalen-Lippe Case C-341/08 the ECJ held that the requirements of A.2.5 were not met – the State could not argue the setting of retirement age of 68 for panel dentists was necessary for the health of patients when a similar retirement age was not set by national law for dentists in private practice. The ECJ held however that the requirements of Article 6.1 might be met if it was shown that it’s aim was to share out employment opportunities among the generations in the profession of panel dentist, taking into account the situation in the labour market concerned, but this was a matter for the national court to determine.
In Prigge v Deutsche Lufthansa Case C-447/09 the ECJ held that the compulsory retirement age of 60 for pilots of the defendant organisation was unlawful and contrary to Directive 2000/78. The court held that the requirements in Article 2.5 of the Directive were not met and pointed to the fact that international and German legislation permitted pilots to work to the age of 65 provided certain conditions were met.
In O’Neill v. Fairview Motors Ltd. 2012 ELR 340 the claimant was dismissed at age 66. The Equality Tribunal (ET) held the dismissal was discriminatory on the age ground. The ET held the setting of a retirement age must be objectively and reasonably justified by a legitimate aim and the means of achieving the aim were appropriate and necessary, which was not established in the case.
In Doyle v ESB International Ltd. 2013 ELR 34 the claimant was dismissed aged 65. The ET required that the retirement age was objectively and reasonably justified by a legitimate aim and the means of achieving that aim must be appropriate and necessary. The ET pointed to health and safety concerns and the desire to offer career progression for younger staff who the respondent had trained. It was reasonable to have on retirement age for all employees to ensure cohesion. Some employees might be embarrassed by medical assessments on reaching 65.
In Sweeney v. Aer Lingus 2013 ELR 162 the ET found that the respondent had failed to show that a retirement age of 65 for non flying staff was objectively justified. The only argument put forward by the respondent was that the claimant was trustee of the pension scheme, which provided for pension at 65, and it would be perverse for her to claim salary after 65. This was rejected by the ET because ECJ caselaw showed that pension entitlement did not necessitate retirement. However, the court awarded only €5000 in compensation in light of the fact that the claimant was in receipt of pension after 65.
In Hospira v Roper ADE/11/25 the claimants agreed to voluntary redundancy of statutory redundancy plus 5 weeks per year of service but that in the case of those employees who were close to retirement age it was agreed that they would receive either the terms of the agreed package or the amount of salary that they would have earned had they remained in employment until the normal retirement age of 65, whichever was the lesser. The Labour Court held such a term could be objectively justified.
“A worker who is made redundant many years before their expected retirement date loses the expectation of a continuing income up to that date and the redundancy pay that they receive is unlikely to fully compensate them for the loss which they may suffer in consequence of losing their employment. Furthermore, such a worker will be entitled to receive social security payments while seeking alternative employment but the continuance of these payments is now limited to a period of nine months. By contrast, a worker who is made redundant at a time in close proximity to their retirement date and who receives a redundancy payment equal to the earnings that he or she could have expected up to that date suffers no pecuniary loss. Moreover, where, as in this case, the retirement age coincides with the age at which retirement social security pensions become payable the worker will normally have an alternative source of income for their lifetime.”
In Roche v Complete Bar Solutions DEC-E2013-197 the employer sought to impose a retirement age of 65 on the claimant who was employed on behalf of various breweries to service equipment in licensed premises. The employer succeeded in demonstrating that the retirement age of 65 was objectively justified. The ET accepted that evidence that the compulsory retirement age of 65 was custom and practice to create certainty and business planning and to encourage staff morale by using the available job created by retirement as an internal promotional opportunity.
In Lett v Earagail Eisc Teoranta DEC-E2014-076 the employer sought to rely on a number of objective justifications that had previously been accepted by the Equality Tribunal in other decisions. The employer argued that a retirement age was needed for “workforce planning” and to ensure job opportunities amongst younger employees. In rejecting that this was a legitimate aim of the employer, the Equality Tribunal noted that no efforts had been made to fill the vacancy internally and the claimant had never been replaced.
In Goss v. Ryanair Ltd. 2016 ELR the Equality Tribunal held that the respondent was entitled to set a mandatory retirement age of 60 without the need to show of objective justification. Section 34.3 EEA 1998, before its amendment, did not require objective justification. Further, Article 6 of Council Directive 2000/78 did not have direct effect vis-a-vis the respondent, being a private company.
In Minister for Justice v. WRC 2017 IESC 13 An Garda Siochana had an upper age limit on recruitment of 35 set by a statutory instrument. The Supreme Court determined the WRC could not determine the case in favor of the claimant if to do so was to dis-apply secondary legislation but the High Court could determine such a claim in favour of a claimant. The Supreme also referred a question to the CJEU as to what precise jurisdiction the WRC had to embark on a hearing in these circumstances.
In Irish Ferries Ltd. v. McDermott 2017 ELR 151 the Labour Court accepted that the employer had a long established policy of retiring stafff whose work was physically demanding at 65 which was objectively justified as the work was arduous in nature and became more difficult with age. It prevented employees from being exposed to being incapable of discharging their duties and being retired otherwise than with dignity and respect.
In Connaught Airport Development Ltd. v. Glavey 2017 ELR 204 the employer had argued the retirement age was 65. The Labour Court found there was no evidence that the claimant had been informed during his employment that retirement age was 65 and there no express or implied term in his contract to that effect. The Labour Court therefore did not need to assess objective justification and awarded compensation of €6,500.
When taking a case for dismissal on retirement age it might be advisable to take an EEA case rather than a UDA case, on the basis that the the respondent will have to show, in an equality case, that not only was the employee dismissal by reason of reaching retirement age, but also that the fixing of the retirement age was reasonable. The second limb of this requirement would not be a requirement in a UDA case.
It has now been held that Article 2.5 and 6.1, have horizontal direct effect not just vertical direct effect and can be relied upon against respondents other than the State or an emanation of the State (see Lett v Earagail Eisc Teoranta).
Following the ECJ case law, it will be difficult for employers to argue that the setting of a blanket retirement age is necessary to protect the health of service users – there is usually the less onerous measure of medical assessments beyond the retirement age to test the employees fitness to work. Employers have had greater success in the ECJ in defending retirement age on the basis of reintegration of younger workers to the workforce.
Following Hospira v. Roper, it might be objectively justifiable to cap redundancy packages for persons nearing retirement age at the amount the employee would have earned until that age.
The content of this article is intended to provide a general guide to the subject matter and is not intended to be a substitute for legal advice. Specialist advice should be sought about your specific circumstances.
Stephen O’Sullivan BL