In 2021, the Pensions Commission issued a report which included a recommendation to align contractual retirement ages with the state pensionable age (currently age 66) by introducing legislation that allows but does not compel an employee to stay in employment until the state pensionable age.
In 2024, the General Scheme of a Bill proposing to restrict contractual mandatory retirement ages was published (read our briefing here). The government has now published the Bill itself, the Employment (Contractual Retirement Ages) Bill 2025 (“the Bill”) which has commenced its journey through the legislative process. In this briefing we set out what changes the new Bill will bring about and what this will mean for employers.
What is the current law?
While the Employment Equality Acts prohibit discrimination on the grounds of age, an employer may nonetheless enforce a contractual retirement age (CRA) provided it can show the CRA is objectively and reasonably justified by a legitimate aim and that enforcing the CRA is an appropriate and necessary means of achieving that aim.
In 2024, the Supreme Court delivered an important judgment on the law relating to mandatory retirement (read our briefing here). A particular point of focus in the case was whether a blanket mandatory retirement age will be justifiable where individual assessment is possible. The Supreme Court stated “Nothing in the CJEU jurisprudence suggests that an employer is required to justify the application of a general retirement rule to an individual employee. Such a requirement would, of course, substantially negate the benefit of having such a rule in the first place”. There is, therefore, no general requirement for individual assessment in order for a mandatory retirement age to be lawful pursuant to the Employment Equality Acts.
What does the Bill say?
The Bill applies to situations where an employee has a contractual retirement age (CRA) which is less than the state pensionable age and has completed their probationary period (if any). The Bill only applies to contractual mandatory retirement ages and not those set by statute.
The key provisions of the Bill are as follows:
- Where an employee has a CRA which is less that the state pensionable age, they may notify their employer that they do not consent to retire at that age. The notification must issue (i) not less than three months, but not more than one year, before the employee will reach the CRA; or (ii) if their contractual notice period is greater than three months, within that timeframe or six months, whichever is shorter. The employee may not issue more than two such notifications in any six-month period.
- The employer must not enforce the CRA of the individual employee concerned unless it is objectively and reasonably justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.
- An employer who, notwithstanding the notification, proposes to enforce the CRA, must give the employee a written reasoned reply within one month of the date of notification.
- Penalisation or threat of penalisation of an employee for exercising or proposing to exercise their entitlements will be prohibited. Penalisation is very widely defined.
- An employee has the right to refer a complaint to the WRC relating to the employer’s non-compliance with the provisions in the Bill. The WRC may award reinstatement, reengagement and/or an award of compensation of up to two years’ remuneration (or €40,000, whichever is greater). The WRC’s decision may be appealed to the Labour Court.
- In circumstances of non-compliance by the employer, relief may not be granted under both the Bill and the Employment Equality Acts.
- Significantly, the Bill provides that an employer who, without reasonable cause, fails to provide a reasoned reply may be guilty of a criminal offence.
A key aspect of the Bill is that it introduces a requirement to justify the CRA at the level of the individual employee. Employers will need to be in a position to do this in respect of the retirement of an employee who issues a notification, but where the employer nonetheless wish to enforce the CRA.
What does this mean for employers?
Where employers wish to rely on a CRA which is below 66 they will need to be prepared to document employee notifications and ensure reasoned replies issue within one month. They will need to be prepared to demonstrate the CRA is objectively and reasonably justified by a legitimate aim and that it is appropriate and necessary to achieve that aim.
In situations where there is a CRA of 66 or above, the provisions of the Bill will not apply and there will be no requirement to receive employee notifications and provide written reasoned replies. Employers may therefore wish to give thorough consideration and weigh up the pros and cons of increasing any CRAs, which are below the state pensionable age of 66, while bearing in mind that the Employment Equality Acts still apply irrespective of the age set as the CRA.
For further information in relation to this topic, please contact Triona Sugrue, Senior Knowledge Consultant, Aoife Brady, Solicitor or any member of the ALG Employment team.
