Employer entitled to rely on clear retirement age clause in contract when terminating employee's employment and Unfair Dismissal's Act deemed not to apply

Background

In the case of Sean Fleming v Instant Upright Limited (ADJ-0033239) the employee was employed for approximately 30 years with the employer. His employment contract contained a clear and unambiguous clause providing for a retirement age of 65. The employee claimed that at a time of company wide redundancies, he was advised that his services would be required in the future, however, three months later he was retired against his will. 

The Employee's Position

The employee submitted that there had been company wide redundancies in or around September 2020 and at the time, he was not selected for redundancy. In October 2020, a pension broker on behalf of the employee notified the employer that his pension plan would soon mature and the employer made no reference to the fact that they intended to retire the employee in the coming months. 

On 2nd December 2020, the employee received a letter of authorisation from the employer enabling him to travel, for the purposes of Covid 19 restrictions, which the employee maintained showed that the employer intended to retain him beyond his contractual retirement age.  However, only 2 weeks later on the 14th December, the employee was told not to report for work as he had to retire. The employee submitted that the only reason he was not made redundant as part of the restructure was because the employer was intending to retire him in a number of months time. 

The employee further claimed that there was no consultation about his retirement and he was informed of his retirement by a single phone call. The employee also claimed that the retirement age of 65 was not universally applied to all employees and that he was aware of employees who had been kept on past age 65. 

The employee submitted claims to the WRC under both the Unfair Dismissals Act 1977 (as amended) and the Employment Equality Acts 1998-2015. At the hearing, the employee elected to proceed with his claim under the Unfair Dismissals Act. 

The Employer's Response

The employer denied that the employee had been unfairly dismissed and submitted that the employment contract clearly and unambiguously set out a normal retirement age of 65, providing as follows: 

"The normal retirement age in the company is the date of your 65th birthday. The company will contact you 3 months in advance to ensure all issues relating to your retirement are in place".

The employer submitted that the Unfair Dismissals Acts did not apply where the employee had reached normal retirement age. 

The employer noted that two other employees had previously been retained after their 65th birthday and submitted that both of these employees were specialist welders who nominally retired on their 65th birthday but were then retained on a fixed term contract after their retirement age. 

The employer also denied that it did not engage with the employee about his retirement and said that an email was sent to the employee in September 2020 clearly stating that the employee was to retire on the 11th December 2020.

The Law

Section 2(1)(b) of the Unfair Dismissals Acts provides: 

“Except in so far as any provision of this Act otherwise provides, this Act shall not apply in relation to any of the following persons: 

(b) an employee who is dismissed and who, on or before the date of his dismissal, had reached normal retirement age for employees of the same employer in similar employment…."      

Decision

The Adjudication Officer (AO) found that it was accepted by the parties that the employment contract contained a retirement age of 65 and it was accepted that this applied to all employees. 

In relation to the employee's argument that the employer failed to consult with him about his retirement, the AO found that while it was best practice to consult with employees prior to their retirement, the employee's retirement was in no way conditional upon consultation taking place. 

The AO found that the employer's retention of other employees past normal retirement age did not prevent the exclusion set out in the section 2(1)(b) of the Unfair Dismissals Acts from applying. The AO also found that the retention of other employees past age 65 did not mean that the company's normal retirement retirement age was disregarded and noted that the employees referred to were retained on 12 month fixed term contracts on an exceptional basis. 

Ultimately, the AO was satisfied that the exclusion provided for at Section 2(1)(b) of the Unfair Dismissal Acts applied and therefore he had no jurisdiction to hear the complaint. 

Takeaway points from this decision 

1. For whatever reason, the employee in this case elected to proceed with his complaint under the Unfair Dismissals Acts as opposed to the Employment Equality Acts. Had the complaint been considered under the Employment Equality Acts, it is possible the outcome may have been different, as the AO would likely have been required to consider whether the contractual retirement age was objectively justified and whether the objective justification put forward by the employer was appropriate and necessary to achieve a legitimate aim. 
2. The employer in this case was able to rely on the clear and unambiguous clause contained in the employment contract. Without this clause in the employment contract, the employer would likely have faced difficulty requiring the employee to retire at particular age. This serves as a reminder to employers to regularly review and update their employment contracts to ensure they are fit for purpose, including in relation to mandatory or normal retirement ages. 
3. Where an employer does decide to set a normal or mandatory retirement age, it is important that the retirement age is capable of being objectively justified both by the existence of a legitimate aim and evidence that the means of achieving that aim is appropriate and necessary. 
4. Employers should familiarise themselves with the Code of Practice on Longer Working (S.I. 600/2017) which provides helpful guidance in relation to retirement of employees. The Code of Practice notes that it is good practice to notify an employee of the intention to retire him/ her on the contractual retirement date within 6-12 months of that date, in order to allow reasonable time for planning and obtaining advice. 
5. A meeting with the employee is also recommended in order to address the parties' understanding of the retirement date and any possible issues arising; emploration of measures which could support the pathway to retirement i.e. flexible working, alternative roles up to the retirement date; transitional arrangements and assistance around guidance and information.  

If you have any questions or would like to discuss this topic further, please feel free to contact Alison Martin at Alison.Martin@dwf.law