In this article, we focus on an Employer’s guide to navigating Employees’ retirement from your Company and the key considerations that should be explored. As Ireland’s population and workforce age has been increasing, managing an employee’s retirement at work has become an important component of Human Resource Management. Retirement is a major life event that demands careful planning and assistance to guarantee a smooth transition for both the individual and the Employer.
Promoting retirement preparation and planning should be a focus for any HR department so that Employees can adequately prepare for this life-changing event both personally and financially. Employers can play an important role in assisting Employees with retirement preparation. Access to retirement planning tools, resources, and financial guidance are examples of this. Employers should also encourage Employees to examine and review their pension plans as necessary throughout their career in their employment, as well as providing Employees with information on the many pension options that are available to them.
Currently, there is no compulsory retirement age for Irish Employees. However, Organizations enforcing retirement age generally have a stipulation in the written terms and conditions of employment at a very minimum and have demonstrated objective justifications through pursuit of a legitimate aim that can withstand challenge. Nonetheless it is important that Organizations are consistent when enforcing a compulsory retirement age. In late 2022 the Adare Human Resource Management HR Barometer Survey 6.2 looked at what was happening in the area of retirement and pensions. Our research found that just over two in five (43%) of Organizations have a specified retirement age of 65, which was a decrease of over six in ten (64%) in 2021. The research also found that there was an increase in the number of Organizations with a retirement age of 66 or over, 35% having a retirement age of 66 or more which was up 21% from 2021.
Employees looking to work longer
The changing demographics of Irish workers, along with the financial necessity, means that many people want to continue to work beyond 65. Separately the governments shake up of the State Pension by way of introducing auto enrolment from 2024 and providing a higher State Pension for those who work until 70 years of age will have its own impacts on Employers.
We would advise Employers to take any request to work longer under careful consideration given the potential implications in terms of compliance with employment legislation.
While there is provision in the Employment Equality Acts, 1998 – 2015 that states the fixing a retirement age does not constitute age discriminator, there have been several successful WRC claims made in favour of Employees who have been treated unfairly due to their age.
The Workplace Relations Commission prepared a Code of Practice on Longer Working back in 2018 to help provide guidance for Employers when managing retirement among Employees. The areas of guidance are:
• Utilising the skills and experience of older employers
• Objective justification
• Retirement arrangements
• Dealing with requests to work longer
• Utilising skills and experience
Utilising Skills and Experience
The Code sets out some measures that can be taken by Employers to use the skills and experience of older Employees, including training on age diversity, encouraging the sharing of knowledge and experience, ensuring there is no age-related bias and encouraging a culture where there is a need to train Employees of all ages.
Any compulsory retirement age is not discriminatory if it can be justified objectively “both by the existence of a legitimate aim and evidence that the means of achieving that aim is appropriate and necessary’. This could include:
✓ Intergenerational fairness (allowing younger workers to progress);
✓ Motivation and dynamism through the increased prospect of promotion;
✓ Health and Safety (generally in more safety critical occupations);
✓ Creation of a balanced age structure in the workforce;
✓ Personal and professional dignity (avoiding capability issues with older Employees); or
✓ Succession planning.
The Code sets out guidance for Employers on how to support the Employee’s transition to retirement including:
• Opening a dialogue with individual Employees on their plans around retirement, particularly where no contractual retirement age exists, so that there is a clear understanding between the parties.
• Providing supports such as, pre-retirement courses, ﬂexible working arrangements and/or counselling to facilitate the transition to retirement.
• Providing clear information to Employees on retirement procedures, both at recruitment stage and at regular intervals during employment.
Request for longer working
Any request should be considered carefully as already stated and Employers should consider the following when assessing any requests:
• Grounds or reasons the request should be accepted or refused
• The factors that are impersonal to the employ
• What form would any extensions might take (fixed term contract, etc)
• And, whether ﬂexible working might be more appropriate
The Code also sets out the process and timeframe that any request should be considered, including outlining the procedure for meeting with the Employee, granting or refusing the request in writing and clearly stating the reasons for the decision.
We always advise that a retirement age is specified in the Terms of Employment for all Employees. This provides a clear understanding from the outset of the relationship.
But if a request for longer working is summited, it should be considered and assessed on the merits of the Employee and the needs of the business. Employers need to bear in mind that every Employee must be treated fairly and consistently when addressing future requests as well as the potential impacts on existing contracts.
Managing an Employee’s retirement in the workplace requires careful planning, support, and compliance with legal requirements. Employers should always stay abreast of changing statutory legal requirements to retirement and pension entitlements. And, look at all available options in terms of the employment relationship.
If your Organisation needs advice, support, or guidance in relation to compliance requirements or any HR issues, please check out our website https://www.shannonchamber.ie/services/shannon-chamber-hr/ or contact Adare Human Resource Management call (01) 561 3594 or email email@example.com.