Dublin: A major change to Ireland’s employment laws will come into effect on Monday, June 29, giving thousands of workers greater flexibility over when they retire.
The new legislation will restrict the use of contractual retirement clauses that require employees to leave their jobs at the age of 65. As a result, workers will now have a legal pathway to continue working until the state pension age of 66.
The reform addresses a long-standing issue faced by many employees who were required to retire at 65 but had to wait an additional year before becoming eligible for the state pension, leaving some without a stable source of income during the gap period.
Employees Can Request to Stay in Work
Under the new rules, employees who wish to continue working beyond the contractual retirement age must formally notify their employer that they do not agree to retire at the age specified in their employment contract.
The notification must be submitted at least three months, and no more than 12 months, before the employee’s planned retirement date.
Employers will be required to give serious consideration to such requests. If they decide to enforce the contractual retirement age, they must respond within one month and demonstrate that their decision meets the legal standards set out under the legislation.
Higher Threshold for Mandatory Retirement
The new law places a greater burden on employers seeking to compel retirement at age 65.
Employers must now provide clear, objective and reasonable grounds for requiring an employee to retire. Mandatory retirement will only be permitted where it can be shown to be a necessary and proportionate measure to achieve a legitimate organisational objective.
The legislation does not apply to employees whose contractual retirement age is already 66 or older. It also excludes members of An Garda Síochána and the Defence Forces, whose retirement ages are set by separate statutory provisions.
Most public servants and civil service employees have already been permitted to remain in employment until the age of 70 since reforms introduced in 2018.
Significant Change for Workers
Minister for Enterprise, Tourism and Employment, Peter Burke, described the legislation as an important step forward for workers.
“This is a significant change that will give employees greater choice and flexibility in deciding when to retire. Those who wish to continue working will now have the opportunity to remain in employment until reaching the state pension age,” he said.
New WRC Code of Practice
To support implementation of the legislation, the Workplace Relations Commission (WRC) has published an updated Code of Practice on Longer Working.
While the code is not legally binding, it may be used as evidence in workplace disputes and will help guide employers and employees on best practice when dealing with retirement-related requests.
Workers who believe their rights have been breached will be entitled to lodge a complaint with the WRC.
If a complaint is upheld, the commission may order an employer to rectify the breach or award compensation of up to 104 weeks’ remuneration or €40,000, whichever amount is greater.
Penalties for Non-Compliance
Employers who fail to comply with the new legislation could face penalties including fines of up to €5,000, imprisonment for up to 12 months, or both.
As a result, many organisations are expected to review and update their retirement policies to ensure compliance with the new requirements.
Welcomed by Trade Unions and Experts
The Irish Congress of Trade Unions (ICTU) welcomed the legislation, describing it as an important advancement in protecting workers’ rights to remain employed until the state pension age.
However, the organisation noted that employees may still challenge compulsory retirement beyond the age of 66 under existing age discrimination laws.
Economists and labour market experts have also welcomed the move, arguing that retaining experienced workers for longer will help address skills shortages and labour market pressures arising from Ireland’s ageing population.
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