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The Employment Contractual Retirement Ages Act 2025 has been enacted to ensure that those working beyond their State Pension age do not end up forced into retirement before then. It takes care of the ever-present “retirement cliff”, which meant that many people who were not earning a State Pension (at age 66) were forced to quit their jobs at 65 (or earlier).
The new law will enhance employees rights and set reasonable standards and norms for the employers’ retirement policies.
New Right for Eligible Employees
The cornerstone of the legislation is a statutory right to challenge a contractual retirement age lower than 66, if that is the specified age for an employee and that age has been reached. It does not automatically end the people’s jobs, but offers them the opportunity to stay working until the age of 66.
This right shall be exercised in writing no less than three months and no more than twelve months prior to the date of expiration of the employee’s contract. The notification should clearly mention the provisions of Section 5(1) of the Act. Employers must reply in writing within one calendar month.
Employers Face a Higher Legal Standard
The Act does away with the contractual clauses for compulsory retirement at age below 66, which are usually double standards. If the employer does not agree to the employee’s request then they will need to be able to objectively justify and prove a proportionality.
The Workplace Relations Commission has recently revised its Code of Practice on ‘Longevity in the Workplace’ and employers should ensure they have evidence to support their argument for the necessity of mandatory retirement. They also must demonstrate that such age discrimination is not only fair but required to do so.
If not met by the employer, the employer may be vulnerable to an unfair dismissal claim and a discrimination claim and financial penalties.
What HR Teams Should Do?
All employers in Ireland should take a fresh look at their employment practices now in light of the new legislation. Retirement contracts in place with retirement ages before 66 will need to be reviewed and retirement policies in the employee handbook will need to be adjusted to align with the new legislation.
HR teams would also need to put in place protocols for notifying employees subject to the new requirements as per the law within the statutory timetable and inform the managers of the new rules. Further legal penalties may apply for any action taken by the employer that has a negative impact on the employee for exercising their rights under the Act.
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Who Is Excluded?
The Act is not blanket but is offered to the top city and its surrounding regions. These protections do not extend to employees on probation, to employees at or past their contractual retirement age of 66, or to other public safety occupations (including occupational groups) that are covered by other laws.
FAQs
What is the Employment Contractual Retirement Ages Act 2025?
It is a new Irish employment law which provides those who meet the requirements with a statutory right of objection to the compulsory retirement before age 66 when people become old enough to receive their State Pension.
What’s required of an employee’s notice?
An employee must provide written notice of between 3 and 12 months before his/her contractual retirement date, and refer to Section 5(1) of the Act.
Is it still possible for employers to force people out of work before they reach age 66?
Yes, but only when they can objectively substantiate their retirement on the basis of a valid business purpose and establish a business need based on the WRC Code of practice.
